##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended: March 31, 2011
 Or
 o
    
    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
  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)
 (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PagePart I.
    
    Financial InformationItem 1.
    
    Financial Statements (Unaudited):Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    3Consolidated Statements of Operations and Comprehensive Income (Loss)
for the Three Months Ended March 31, 2011 and March 31, 2010
    
    
    4Consolidated Statements of Equity for the Three Months Ended March 31, 2011
and March 31, 2010
    
    
    5Consolidated Statements


of Cash Flows for the Three Months Ended March 31, 2011
and March 31, 2010
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    25Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    34Item 4.
    
    Controls and Procedures
    
    
    34Part II.
    
    Other InformationItem 6.
    
    Exhibits
    
    
    35Signatures
    
    
    
    
    36Exhibit Index
    
    
    
    
    37EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



Item 1. Financial Information
 
 
   March 31,
    
    
    December 31,2011
    
    
    2010(unaudited)
    
    
    (unaudited)ASSETSInvestments in real estate, at costLand
    
    $
    36,495
    
    
    $
    37,142Buildings and improvements
    
    
    273,071
    
    
    
    271,357309,566
    
    
    
    308,499Less: accumulated depreciation
    
    
    (38,084
    )
    
    
    (36,232
    )Investments in real estate, net
    
    
    271,482
    
    
    
    272,267Cash and cash equivalents
    
    
    21,240
    
    
    
    45,257Restricted cash held in escrows
    
    
    30,648
    
    
    
    8,593Loans receivable, net
    
    
    105,390
    
    
    
    110,395Accounts receivable, net of allowances of $378 and $262, respectively
    
    
    12,534
    
    
    
    12,402Securities carried at fair value
    
    
    14,695
    
    
    
    33,032Loan securities carried at fair value
    
    
    14,132
    
    
    
    11,981Preferred equity investment
    
    
    4,034
    
    
    
    4,010Equity investments
    
    
    106,606
    
    
    
    81,937Other receivables, net
    
    
    8,459
    
    
    
    Lease intangibles, net
    
    
    25,651
    
    
    
    26,821Deferred financing costs, net
    
    
    1,479
    
    
    
    1,158Assets held for sale
    
    
    3,710
    
    
    
    2,275TOTAL ASSETS
    
    $
    620,060
    
    
    $
    610,128LIABILITIESMortgage loans payable
    
    $
    212,155
    
    
    $
    230,443Series B-1 Cumulative Convertible Redeemable Preferred Shares, $25
per share liquidation preference; 852,000 shares authorized and
outstanding at March 31, 2011 and December 31, 2010
    
    
    21,300
    
    
    
    21,300Secured financing
    
    
    15,150
    
    
    
    Revolving line of credit
    
    
    33,875
    
    
    
    25,450Accounts payable and accrued liabilities
    
    
    11,982
    
    
    
    12,557Dividends payable
    
    
    4,441
    
    
    
    4,431Deferred income
    
    
    1,206
    
    
    
    150Below market lease intangibles, net
    
    
    2,503
    
    
    
    2,696Liabilites of held for sale assets
    
    
    537
    
    
    
    33TOTAL LIABILITIES
    
    
    303,149
    
    
    
    297,060COMMITMENTS AND CONTINGENCIESNON-CONTROLLING REDEEMABLE PREFERRED INTERESTSeries C Cumulative Convertible Redeemable Preferred Shares, $25 per
share liquidation preference, 144,000 shares authorized and
outstanding at March 31, 2011 and December 31, 2010
    
    
    3,221
    
    
    
    3,221Total non-controlling redeemable preferred interest
    
    
    3,221
    
    
    
    3,221EQUITYWinthrop Realty Trust Shareholders Equity:Common Shares, $1 par, unlimited shares authorized; 27,088,347 and
27,030,186 issued and outstanding at March 31, 2011 and
December 31, 2010, respectively
    
    
    27,088
    
    
    
    27,030Additional paid-in capital
    
    
    570,208
    
    
    
    569,586Accumulated distributions in excess of net income
    
    
    (298,045
    )
    
    
    (300,782
    )Accumulated other comprehensive loss
    
    
    
    
    
    
    (63
    )Total Winthrop Realty Trust Shareholders Equity
    
    
    299,251
    
    
    
    295,771Non-controlling interests
    
    
    14,439
    
    
    
    14,076Total Equity
    
    
    313,690
    
    
    
    309,847TOTAL LIABILITIES AND EQUITY
    
    $
    620,060
    
    
    $
    610,128
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##### Table of Contents



Three Months EndedMarch 31,2011
    
    
    2010(unaudited)
    
    
    (unaudited)RevenueRents and reimbursements
    
    $
    10,986
    
    
    $
    9,320Interest, dividends and discount accretion
    
    
    9,672
    
    
    
    3,20920,658
    
    
    
    12,529ExpensesProperty operating
    
    
    4,045
    
    
    
    1,949Real estate taxes
    
    
    1,255
    
    
    
    720Depreciation and amortization
    
    
    3,481
    
    
    
    2,300Interest
    
    
    4,613
    
    
    
    3,651General and administrative
    
    
    2,524
    
    
    
    1,907State and local taxes
    
    
    29
    
    
    
    1415,947
    
    
    
    10,541Other income (loss)Earnings from preferred equity investments
    
    
    83
    
    
    
    83Equity in loss of equity investments
    
    
    (1,355
    )
    
    
    (527
    )Realized gain on sale of securities carried at fair value
    
    
    124
    
    
    
    695Unrealized gain on securities carried at fair value
    
    
    886
    
    
    
    2,540Unrealized gain (loss) on loan securities carried at fair value
    
    
    2,813
    
    
    
    (613
    )Interest income
    
    
    93
    
    
    
    372,644
    
    
    
    2,215Income from continuing operations
    
    
    7,355
    
    
    
    4,203Discontinued operationsIncome from discontinued operations
    
    
    47
    
    
    
    247Consolidated net income
    
    
    7,402
    
    
    
    4,450Income attributable to non-controlling interest
    
    
    (204
    )
    
    
    (245
    )Net income attributable to Winthrop Realty Trust
    
    
    7,198
    
    
    
    4,205Income attributable to non-controlling redeemable preferred
interest
    
    
    (59
    )
    
    
    (113
    )Net income attributable to Common Shares
    
    $
    7,139
    
    
    $
    4,092Comprehensive incomeConsolidated net income
    
    $
    7,402
    
    
    $
    4,450Change in unrealized gain on available for sale securities
    
    
    
    
    
    
    7Change in unrealized gain on interest rate derivative
    
    
    63
    
    
    
    40Comprehensive income
    
    $
    7,465
    
    
    $
    4,497Per Common Share data  BasicIncome from continuing operations
    
    $
    0.26
    
    
    $
    0.19Income from discontinued operations
    
    
    
    
    
    
    0.01Net income attributable to Winthrop Realty Trust
    
    $
    0.26
    
    
    $
    0.20Per Common Share data  DilutedIncome from continuing operations
    
    $
    0.26
    
    
    $
    0.19Income from discontinued operations
    
    
    
    
    
    
    0.01Net income attributable to Winthrop Realty Trust
    
    $
    0.26
    
    
    $
    0.20Basic Weighted-Average Common Shares
    
    
    27,079
    
    
    
    20,598Diluted Weighted-Average Common Shares
    
    
    27,081
    
    
    
    21,389
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##### Table of Contents



Accumulated
    
    
    AccumulatedCommon Shares of
    
    
    Additional
    
    
    Distributions
    
    
    Other
    
    
    Non-Beneficial Interest
    
    
    Paid-In
    
    
    in Excess of
    
    
    Comprehensive
    
    
    ControllingShares
    
    
    Amount
    
    
    Capital
    
    
    Net Income
    
    
    Income
    
    
    Interests
    
    
    TotalBalance, December 31, 2010
    
    
    27,030
    
    
    $
    27,030
    
    
    $
    569,586
    
    
    $
    (300,782
    )
    
    $
    (63
    )
    
    $
    14,076
    
    
    $
    309,847Net income attributable to Winthrop Realty Trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,198
    
    
    
    
    
    
    
    
    
    
    
    7,198Net income attributable to non-controlling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    204
    
    
    
    204Distributions to non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118
    )
    
    
    (118
    )Contributions from non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    277
    
    
    
    277Dividends paid or accrued on Common
Shares of Beneficial Interest ($0.1625 per
share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,402
    )
    
    
    
    
    
    
    
    
    
    
    (4,402
    )Dividends paid or accrued on Series C Preferred
Shares ($0.40625 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    (59
    )Change in unrealized gain on interest rate
derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    63Shares issued pursuant to dividend
reinvestment plan
    
    
    58
    
    
    
    58
    
    
    
    622
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680Balance, March 31, 2011
    
    
    27,088
    
    
    $
    27,088
    
    
    $
    570,208
    
    
    $
    (298,045
    )
    
    $
    
    
    
    $
    14,439
    
    
    $
    313,690Balance, 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,662Shares issued pursuant to dividend
reinvestment plan
    
    
    48
    
    
    
    48
    
    
    
    524
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    620Balance, March 31, 2010
    
    
    21,137
    
    
    $
    21,137
    
    
    $
    506,876
    
    
    $
    (300,660
    )
    
    $
    (40
    )
    
    $
    12,524
    
    
    $
    240,599
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##### Table of Contents



Three Months EndedMarch 31,2011
    
    
    2010(unaudited)
    
    
    (unaudited)Cash flows from operating activitiesNet income
    
    $
    7,402
    
    
    $
    4,450Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization (including amortization
of deferred financing costs)
    
    
    2,409
    
    
    
    1,644Amortization of lease intangibles
    
    
    1,237
    
    
    
    654Straight-lining of rental income
    
    
    (346
    )
    
    
    599Loan discount accretion
    
    
    (6,504
    )
    
    
    (1,741
    )Earnings of preferred equity investments
    
    
    (83
    )
    
    
    (83
    )Distributions of income from preferred equity investments
    
    
    59
    
    
    
    103Losses of equity investments
    
    
    1,355
    
    
    
    527Distributions of income from equity investments
    
    
    1,166
    
    
    
    590Restricted cash held in escrows
    
    
    1,501
    
    
    
    1,745Gain on sale of securities carried at fair value
    
    
    (124
    )
    
    
    (695
    )Unrealized gain on securities carried at fair value
    
    
    (886
    )
    
    
    (2,540
    )Unrealized (gain) loss on loan securities carried at fair value
    
    
    (2,813
    )
    
    
    613Tenant leasing costs
    
    
    (260
    )
    
    
    (2,131
    )Bad debt expense (recovery)
    
    
    116
    
    
    
    (20
    )Net change in interest receivable
    
    
    (226
    )
    
    
    5Net change in accounts receivable
    
    
    149
    
    
    
    735Net change in accounts payable and accrued liabilities
    
    
    63
    
    
    
    (584
    )Net cash provided by operating activities
    
    
    4,215
    
    
    
    3,871Cash flows from investing activitiesInvestments in real estate
    
    
    (3,293
    )
    
    
    (687
    )Investment in equity investments
    
    
    (27,190
    )
    
    
    (920
    )Purchase of securities carried at fair value
    
    
    (568
    )
    
    
    (1,306
    )Proceeds from sale of securities carried at fair value
    
    
    19,915
    
    
    
    11,407Restricted cash held in escrows
    
    
    (7,927
    )
    
    
    (30
    )Issuance and acquisition of loans receivable
    
    
    (2,773
    )
    
    
    (679
    )Proceeds from sale of loans receivable
    
    
    
    
    
    
    3,000Collection of loans receivable
    
    
    170
    
    
    
    Investment in other receivables
    
    
    (7,000
    )
    
    
    Net cash (used in) provided by investing activities
    
    
    (28,666
    )
    
    
    10,785Cash flows from financing activitiesProceeds from mortgage loans payable
    
    
    11,000
    
    
    
    Principal payments of mortgage loans payable
    
    
    (29,288
    )
    
    
    (1,790
    )Proceeds from revolving line of credit
    
    
    27,324
    
    
    
    Payment of revolving line of credit
    
    
    (18,899
    )
    
    
    Proceeds from note payable
    
    
    15,150
    
    
    
    Restricted cash held in escrows
    
    
    (629
    )
    
    
    37Deferred financing costs
    
    
    (612
    )
    
    
    (13
    )Contribution from non-controlling interest
    
    
    277
    
    
    
    288Distribution to non-controlling interest
    
    
    (118
    )
    
    
    (120
    )Issuance of Common Shares under Dividend Reinvestment Plan
    
    
    680
    
    
    
    572Dividend paid on Common Shares
    
    
    (4,392
    )
    
    
    (3,311
    )Dividend paid on Series C Preferred Shares
    
    
    (59
    )
    
    
    (221
    )Net cash provided by (used in) financing activities
    
    
    434
    
    
    
    (4,558
    )Net (decrease) increase in cash and cash equivalents
    
    
    (24,017
    )
    
    
    10,098Cash and cash equivalents at beginning of period
    
    
    45,257
    
    
    
    66,493Cash and cash equivalents at end of period
    
    $
    21,240
    
    
    $
    76,591
  
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Three Months EndedMarch 31,2011
    
    
    2010(unaudited)
    
    
    (unaudited)Supplemental Disclosure of Cash Flow
InformationInterest paid
    
    $
    4,754
    
    
    $
    3,687Taxes paid
    
    $
    18
    
    
    $
    11Supplemental Disclosure on Non-Cash Investing
and
Financing ActivitiesDividends accrued on Common Shares
    
    $
    4,402
    
    
    $
    3,435Dividends accrued on Series C Preferred Shares
    
    $
    39
    
    
    $
    39Capital expenditures accrued
    
    $
    122
    
    
    $
    141Other receivables
    
    $
    (1,459
    )
    
    $
    Loan securities carried at fair value
    
    $
    662
    
    
    $
    Loans receivable
    
    $
    (662
    )
    
    $
    
  7




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##### Table of Contents



1.
    
    Organization
 Winthrop Realty Trust (Winthrop), a real estate investment trust (REIT) under section 856-860
of the Internal Revenue Code 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 estate and related investments.Since January 11, 2005, Winthrop has conducted 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) ownership of investment properties (operating
properties); (ii) origination and acquisition of loans and debt securities collaterized directly
or indirectly by commercial and multi-family real property, including collateral mortgage-backed
securities (collectively loan assets); and (iii) equity and debt interests in other real estate
investment trusts (REIT securities).
 2.
    
    Summary of Significant Accounting Policies
 Basis of PresentationThe 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, 2010 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, 2011 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., and the Operating
Partnership. All majority-owned subsidiaries and affiliates over which the Trust has financial and
operating control and variable interest entities (VIEs) in which the Trust has determined it is
the primary beneficiary are included in the consolidated financial statements. All significant
intercompany balances and transactions have been eliminated in consolidation. The Trust accounts
for all other unconsolidated joint ventures using the equity method of accounting. Accordingly, the
Trusts share of the earnings of these joint ventures and companies is included in consolidated net
income.ReclassificationsCertain prior year balances have been reclassified in order to conform to the current year
presentation. Discontinued operations for the three month period ended March 31, 2011 include the
Trusts properties in Lafayette, Louisiana; Knoxville, Tennessee; and St. Louis, Missouri.
Discontinued operations for the three month period ended March 31, 2010 also include the Trusts
properties in Athens, Georgia and Sherman, Texas which were disposed of in 2010.Earnings Per ShareThe 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 Trusts 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
 8




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##### Table of Contents



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 for this purpose that the conversion price of the Series C Preferred
Shares equals the conversion price of 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. The reconciliation of earnings attributable to
Common Shares outstanding for the basic and diluted earnings per share calculation is as follows
(in thousands, except per share data):
 Three Months EndedMarch 31,2011
    
    
    2010BasicIncome from continuing operations
    
    $
    7,355
    
    
    $
    4,203Allocation of undistributed earnings to Series C
Preferred Shares
    
    
    (9
    )
    
    
    Income attributable to non-controlling interest
    
    
    (204
    )
    
    
    (245
    )Preferred dividend of Series C Preferred Shares
    
    
    (59
    )
    
    
    (113
    )Income from continuing operations applicable
to Common Shares
    
    
    7,083
    
    
    
    3,845Income from discontinued operations
    
    
    47
    
    
    
    247Net income applicable to Common Shares
for earnings per share purposes
    
    $
    7,130
    
    
    $
    4,092Basic weighted-average Common Shares
    
    
    27,079
    
    
    
    20,598Income from continuing operations
    
    $
    0.26
    
    
    $
    0.19Income from discontinued operations
    
    
    
    
    
    
    0.01Net income per Common Share
    
    $
    0.26
    
    
    $
    0.20DilutedIncome from continuing operations
    
    $
    7,355
    
    
    $
    4,203Allocation of undistributed earnings
to Series C Preferred Shares
    
    
    (9
    )
    
    
    Income attributable to non-controlling interest
    
    
    (204
    )
    
    
    (245
    )Preferred dividend of Series C Preferred Shares
    
    
    (59
    )
    
    
    Income from continuing operations applicable
to Common Shares
    
    
    7,083
    
    
    
    3,958Income from discontinued operations
    
    
    47
    
    
    
    247Net income applicable to Common Shares
for earnings per share purposes
    
    $
    7,130
    
    
    $
    4,205Basic weighted-average Common Shares
    
    
    27,079
    
    
    
    20,598Series B-1 Preferred Shares (1)
    
    
    
    
    
    
    Series C Preferred Shares (2)
    
    
    
    
    
    
    789Stock options (3)
    
    
    2
    
    
    
    2Diluted weighted-average Common Shares
    
    
    27,081
    
    
    
    21,389Income from continuing operations
    
    $
    0.26
    
    
    $
    0.19Income from discontinued operations
    
    
    
    
    
    
    0.01Net income per Common Share
    
    $
    0.26
    
    
    $
    0.20
 9




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##### Table of Contents



(1)
    
    The Series B-1 Preferred Shares were anti-dilutive for the three
months ended March 31, 2011 and 2010 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 anti-dilutive for the three
months ended March 31, 2011 and are not included in the
weighted-average shares outstanding for the calculation of diluted earnings
per Common Share. The Series C Preferred Shares were dilutive for the three
months ended March 31, 2010.(3)
    
    The Trusts outstanding stock options were dilutive for the three
months ended March 31, 2011 and 2010. Recently Issued Accounting StandardsIn April 2011 the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update
that provides clarification on which loan modifications meet the criteria to be treated as Troubled
Debt Restructurings (TDRs).The guidance is intended to improve financial reporting by creating
greater consistency in the way accounting principles generally accepted in the United States of
America (GAAP) is applied for various TDRs by reaffirming the requirements and clarifying the
criteria that creditors should use in evaluating whether a restructuring constitutes a TDR. The
guidance is effective for interim and/or annual periods beginning on or after June 15, 2011, and
early application is permitted. The Trust has adopted this standard which did not have a material
impact on its consolidated financial statements.
 3.
    
    Fair Value Measurements
 Cash and cash equivalents, restricted cash in escrows, derivative financial instruments, and
certain securities are reported at fair value. The accounting standards establish a
framework for measuring fair value as well as disclosures about fair value measurements. They
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 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).Recurring MeasurementsThe table below presents the Trusts assets and liabilities measured at fair value on a recurring
basis as of March 31, 2011, according to the level in the fair value hierarchy within which those
measurements fall (in thousands):
 Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical Assets
    
    
    Observable
    
    
    Unobservableand Liabilities
    
    
    Inputs
    
    
    InputsRecurring Basis
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalAssetsCash and cash equivalents
    
    $
    21,240
    
    
    $
    
    
    
    $
    
    
    
    $
    21,240Restricted cash held in escrow
    
    
    30,648
    
    
    
    
    
    
    
    
    
    
    
    30,648Securities carried at fair value
    
    
    14,695
    
    
    
    
    
    
    
    
    
    
    
    14,695Loan securities carried at fair value
    
    
    
    
    
    
    
    
    
    
    14,132
    
    
    
    14,132$
    66,583
    
    
    $
    
    
    
    $
    14,132
    
    
    $
    80,715
 10




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##### Table of Contents



Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical Assets
    
    
    Observable
    
    
    Unobservableand Liabilities
    
    
    Inputs
    
    
    InputsRecurring Basis
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalAssetsCash and cash equivalents
    
    $
    45,257
    
    
    $
    
    
    
    $
    
    
    
    $
    45,257Restricted cash held in escrow
    
    
    8,593
    
    
    
    
    
    
    
    
    
    
    
    8,593Securities carried at fair value
    
    
    33,032
    
    
    
    
    
    
    
    
    
    
    
    33,032Loan securities carried at fair value
    
    
    
    
    
    
    
    
    
    
    11,981
    
    
    
    11,981$
    86,882
    
    
    $
    
    
    
    $
    11,981
    
    
    $
    98,863LiabilitiesDerivative liabilities
    
    $
    
    
    
    $
    63
    
    
    $
    
    
    
    $
    63
 The table below includes a roll forward of the balance sheet amounts from January 1, 2011 to
March 31, 2011, 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, the determination is based upon the
significance of the unobservable factors to the overall fair value measurement.
 Loan SecuritiesCarried at FairThree Months Ended March 31, 2011
    
    Value(in thousands)Fair value, January 1, 2011
    
    $
    11,981Sales
    
    
    (662
    )Unrealized gain, net
    
    
    2,813Fair value, March 31, 2011
    
    $
    14,132
 Fair Value OptionThe 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 are 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 loan
securities and REIT securities acquired subsequent to September 30, 2008.For the three months ended March 31, 2011 and 2010, the Trust recognized net unrealized gains of
$3,699,000 and $1,927,000, respectively, 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.
 11




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##### Table of Contents



The following table presents as of March 31, 2011 and December 31, 2010 the Trusts financial
assets for which the fair value option was elected (in thousands):
 Financial Instruments at Fair Value
    
    March 31, 2011
    
    
    December 31, 2010AssetsSecurities carried at fair value:REIT Preferred shares
    
    $
    10,547
    
    
    $
    28,547REIT Common shares
    
    
    4,148
    
    
    
    4,485Loan securities carried at fair value
    
    
    14,132
    
    
    
    11,981$
    28,827
    
    
    $
    45,013
 The table below presents as of March 31, 2011 the difference between fair values and the aggregate
contractual amounts due for which the fair value option has been elected (in thousands):
 Fair Value at
    
    
    Amount DueMarch 31, 2011
    
    
    Upon Maturity
    
    
    DifferenceAssetsLoan securities carried at fair value
    
    $
    14,132
    
    
    $
    16,241
    
    
    $
    2,109$
    14,132
    
    
    $
    16,241
    
    
    $
    2,109
 4.
    
    Acquisition, Disposition, Leasing and Financing Activities
 Acquisition ActivityGotham Hotel  Joint Venture Loan Acquisition- On February 23, 2011 the Trust acquired for
$15,628,000 a performing $16,303,000 first mortgage secured by a lien on a recently constructed,
26-story, 66 room limited service boutique hotel located in New York, New York through a 50/50
joint venture. The loan bears interest at a rate of 9.33%, and matured on May 4, 2011. The
borrower is working on a proposed settlement anticipated to be resolved during the second quarter
of 2011. The Trust will account for its investment in the joint venture using the equity method.Vintage Receivables Acquisition On March 2, 2011 the Trust entered into an agreement pursuant to
which it agreed, subject to the satisfaction of certain conditions, to purchase for $25,200,000 an
effective 75% interest in a joint venture which owns the general partnership interests in and
developer fees and advances receivable from partnerships owning 26 multifamily and senior housing
properties comprising approximately 4,400 units located primarily in the Pacific Northwest and
California. On March 8, 2011, the first stage of the transaction closed pursuant to which the
Trust acquired for a purchase price of $7,000,000 certain of the receivables owed by the underlying
partnerships. The balance of the transaction is expected to close upon obtaining all requisite
lender and limited partner consents which are anticipated to be obtained during the second quarter.
If the second step of the transaction fails to close by June 30, 2011, the seller has the right to
repurchase the assets acquired at a price equal to the Trusts purchase price plus a 12% return
thereon. The Trust will account for this investment as other receivables.Lakeside Eagle  Joint Venture Loan Acquistion On March 22, 2011 the Trust, through a 50/50
joint venture, purchased at par two non-performing first mortgage loans for an aggregate price of
$35,558,000. The loans are collateralized by two retail centers located in Riverside County,
California. Both notes matured on April 1, 2010 and are in maturity default. The notes bear
interest at their default rate of 8.92% (4.92% stated note rate plus 4% default rate). Upon
acquisition, the joint venture began foreclosure proceedings. The Trust will account for its
investment in the joint venture using the equity method.CDO Management- On March 23, 2011, a venture in which Winthrop will hold a 50% interest entered
into a contract to acquire the collateral management agreements with respect to three real estate
CDOs that hold loans and loan securities. The acquisition of the collateral management agreements is
subject to the satisfaction of certain conditions precedent, including required third party
consents.
 12




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##### Table of Contents



Disposition ActivityConcord CDO  CDO Bonds In February 2011, the Trust sold to Concord Debt Funding Trust (CDFT)
a wholly owned subsidiary of CDH CDO LLC, an entity in which the Trust holds a 33.3% interest, and
the sole equity owner of Concord Real Estate CDO-1 LTD (CDO-1), tranche E bonds with a face
amount of $9,000,000 issued by CDO-1. In exchange for the bonds, the Trust received a note in the
amount of the Trusts original purchase price plus accrued interest. At March 31, 2011 the
carrying value of the loan plus accrued interest was $759,000. The note plus accrued interest was
repaid in full on April 15, 2011.Financing ActivitySan Marbeya Loan Receivable Participation Interest  On January 14, 2011, the Trust restructured the
San Marbeya first mortgage loan to create a $15,150,000 senior participation which bears interest
at 4.85% and a $15,744,000 junior participation which bears interest at 6.4% and concurrently
issued the senior loan participation to CDO-1 at par. The Trust will account for the loan
participation as a secured borrowing with a pledge of collateral, establishing a liability for the
portion participated to CDO-1.Newbury Apartments Loan Modification On February 24, 2011 the Trust reached an agreement with the
first mortgage lender on its Newbury Apartments property to repay all past due interest and fees of
approximately $853,000, to fund escrows of approximately $83,000, to prepay Marchs debt service
inclusive of escrows of approximately $150,000 and to pay a modification fee of approximately
$119,000 (0.5% of the loan balance). In exchange the lender waived all defaulted interest,
modified the payments to interest only and extended the maturity date to February 1, 2014. The
note bears interest at 5.83% and the waiver of past due interest and fees will be recorded as a
yield adjustment over the remaining term of the note. The Trust has recognized no gain or loss in
connection with this transaction. Costs incurred by the Trust totaling $176,500, inclusive of the
modification fee of $119,000, have been charged to expense.Revolving Line of Credit  On March 3, 2011 the Trust amended its existing revolving line of credit
such that (i) the maximum borrowing was increased to $50,000,000 with an accordion feature of up to
$150,000,000 (ii) the maturity date was extended to March 2014 with an option to extend the
maturity date to March 2015. The amended credit facility bears interest at Libor plus 3%. In March
2011, the Trust drew down $10,985,000 to satisfy certain mortgage loan payable and $16,000,000 to
fund new investments. These borrowings, together with the existing balance, resulted in an
outstanding balance on the revolving line of credit of $33,875,000 at March 2011. The Trust
capitalized $370,000 of expenses incurred in connection with this transaction and is amortizing the
balance over the modified life.Plantation, Florida Property Level Financing On March 4, 2011 the Trust financed its Plantation,
Florida property with an $11,000,000 first mortgage loan bearing interest at 6.483% and maturing on
April 1, 2018. The net proceeds of approximately $10,676,000 were used to partially satisfy a
mortgage loan payable.
 13




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##### Table of Contents



5.
    
    Loans Receivable
 The following table summarizes the Trusts loans receivable at March 31, 2011 and December 31, 2010
(in thousands):
 Carrying Amount
    
    
    ContractualStated
    
    March 31,
    
    
    December 31,
    
    
    MaturityDescription
    
    Location
    
    Interest Rate
    
    2011
    
    
    2010
    
    
    DateBeverly Hilton (1)
    
    Beverly Hills, CA
    
    Libor + 1.74%
    
    $
    8,697
    
    
    $
    7,899
    
    
    08/09/11Westwood (1)
    
    Phoeniz, AZ
    
    11.00%
    
    
    3,500
    
    
    
    3,500
    
    
    10/31/11Metropolitan Tower
    
    New York, NY
    
    Libor + 1.51%
    
    
    
    
    
    
    10,312
    
    
    11/01/11Moffett Towers (1)
    
    Sunnyvale, CA
    
    Libor + 6.48%
    
    
    22,583
    
    
    
    21,752
    
    
    01/31/12Siete Square
    
    Phoeniz, AZ
    
    10.37%(2)
    
    
    2,488
    
    
    
    2,488
    
    
    06/09/12160 Spear
    
    San Francisco, CA
    
    9.75%(3)
    
    
    7,578
    
    
    
    6,674
    
    
    06/09/12160 Spear
    
    San Francisco, CA
    
    15.00%
    
    
    4,240
    
    
    
    3,029
    
    
    06/09/12Legacy Orchard (1)
    
    Various
    
    15.00%
    
    
    9,750
    
    
    
    9,750
    
    
    10/31/14San Marbeya (1)
    
    Tempe, AZ
    
    5.88%
    
    
    26,858
    
    
    
    26,966
    
    
    01/01/15CDH CDO LLC (1)
    
    n/a
    
    12.00%
    
    
    3,605
    
    
    
    3,498
    
    
    12/30/15CDH CDO LLC (1)
    
    n/a
    
    12.00%
    
    
    759
    
    
    
    
    
    
    (4)Rockwell
    
    Shirley, NY
    
    12.00%
    
    
    258
    
    
    
    255
    
    
    05/01/16500-512 7th Ave
    
    New York, NY
    
    7.19%
    
    
    9,956
    
    
    
    9,954
    
    
    07/11/16180 N. Michigan (1)
    
    Chicago, IL
    
    8.50%(5)
    
    
    2,637
    
    
    
    1,862
    
    
    12/31/16Wellington Tower (1)
    
    New York, NY
    
    6.79%
    
    
    2,481
    
    
    
    2,456
    
    
    07/11/17$
    105,390
    
    
    $
    110,395
 
 (1)
    
    The Trust determined that certain loans receivable are 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 and is not required to consolidate the
underlying entity.(2)
    
    The Trust holds a B participation in this loan. Interest on the B participation equals the
difference between (i) interest on the entire outstanding loan principal balance ($7,219 at
March 31, 2011) at a rate of 9.8375% per annum less (ii) interest payable on the outstanding
principal balance of the A participation ($3,000 at March 31, 2011) at a rate of 8.0% per
annum. As a result, the effective yield on the Trusts $2,410 cash investment is 21.0%.(3)
    
    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, 2011) 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, 2011) 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%.(4)
    
    This loan was repaid in full in April 2011.(5)
    
    Represents tenant improvement and capital expenditure loans collateralized by a subordinate
mortgage or the ownership interests in the owner of the applicable property. The carrying amount of loans receivable includes accrued interest of $784,000 and $558,000 at March
31, 2011 and December 31, 2010, respectively, and cumulative accretion of $7,808,000 and $9,803,000
at March 31, 2011 and December 31, 2010, respectively. For the three months ended March 31, 2011
and 2010, the Trust recorded discount accretion into interest income of $6,504,000 and $1,741,000
respectively. The fair value of the Trusts loans receivable, exclusive of interest receivables
was approximately $117,904,000 at March 31, 2011.
 14




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##### Table of Contents



The following table summarizes the Trusts interest, dividend and discount accretion income for the
three months ended March 31, 2011 and 2010 (in thousands):
 2011
    
    
    2010Interest, dividends and discount accretion detail:Interest on loan assets
    
    $
    2,710
    
    
    $
    721Accretion of loan discount
    
    
    6,504
    
    
    
    1,741Interest and dividends on REIT securities
    
    
    458
    
    
    
    747Total interest, dividends, and discount accretion
    
    $
    9,672
    
    
    $
    3,209
 Credit Quality of Loans Receivable and Loan LossesThe Trust evaluates impairment on its loan portfolio on an individual basis and has developed a
loan grading system for all of its outstanding loans that are collateralized directly or indirectly
by real estate. Grading categories include debt yield, debt service coverage ratio, length of loan,
property type, loan type, and other more subjective variables that include property or collateral
location, market conditions, industry conditions, and sponsors financial stability. Management
reviews each category and assigns an overall numeric grade for each loan to determine the loans
risk of loss and to provide a threshold for the determination of whether a specific allowance
analysis is necessary. A loans grade of credit quality is determined quarterly.All loans with a positive score do not require a loan loss allowance. Any loan graded with a
neutral score or zero is subject to further review of the collectability of the interest and
principal based on current conditions and qualitative factors to determine if impairment is
warranted. Any loan with a negative score is deemed impaired and management then would measure the
specific impairment of each loan separately using the fair value of the collateral less costs to
sell.Management estimates impairment by calculating the estimated fair value less costs to sell of the
underlying collateral securing the loan based on the present value of expected future cash flows,
and comparing the fair value to the loans net carrying value. If the fair value is less than the
net carrying value of the loan, an allowance is created with a corresponding charge to the
provision for loan losses. The allowance for each loan is maintained at a level the Trust believes
is adequate to absorb losses.The table below summarizes the Trusts loans receivable by internal credit rating at March 31, 2011
(in thousands, except for number of loans).
 Carrying ValueNumber of
    
    
    of LoansInternal Credit Quality
    
    Loans (1)
    
    
    ReceivableGreater than zero
    
    
    10
    
    
    $
    75,962Equal to zero
    
    
    2
    
    
    
    25,064Less than zero
    
    
    
    
    
    
    12
    
    
    $
    101,026
 
 (1)
    
    The Trust holds unsecured loans at March 31,
2011 not included above that have a carrying amount of $4,364.
In April 2011, the Trust received payments of $2,093 and
anticipates that the remaining balance will be repaid during
the second quarter of 2011. There was no provision for loan loss recorded during the three month periods ended March 31, 2011
and 2010.
 15




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##### Table of Contents



Non Performing LoansThe Trust considers a loan to be non-performing and places loans on non-accrual status at such time
as management determines it is probable that it will be unable to collect all amounts due according
to the contractual terms of the loan. While on non-accrual status, based on the Trusts judgment as
to collectability of principal, loans are either accounted for on a cash basis, where interest
income is recognized only upon actual receipt of cash, or on a cost-recovery basis, where all cash
receipts reduce a loans carrying value. If and when a loan is brought back into compliance with
its contractual terms, the Trust will resume accrual of interest. As of March 31, 2011 and
December 31, 2010, there were no non-performing loans and no past due payments.Activity related to loans receivable is as follows (in thousands):
 January 1, 2011 to
    
    
    January 1, 2010 toMarch 31, 2011
    
    
    December 31, 2010Balance at beginning of period
    
    $
    110,395
    
    
    $
    26,101Purchase and advances
    
    
    2,773
    
    
    
    122,301Proceeds from sale
    
    
    
    
    
    
    (12,876
    )Interest (received) accrued, net
    
    
    226
    
    
    
    361Repayments
    
    
    (15,170
    )
    
    
    (15,064
    )Loan accretion
    
    
    6,504
    
    
    
    8,782Reclass from loan securities
    
    
    662
    
    
    
    Reclass to investment in real estate
    
    
    
    
    
    
    (19,210
    )Balance at end of period
    
    $
    105,390
    
    
    $
    110,395
 In addition to our initial purchase price of certain loans, we have future funding
requirements. At March 31, 2011 and December 31, 2010, we had future funding requirements pursuant
to three loans receivable totaling approximately $4,004,000 and $6,031,000, respectively.
 6.
    
    Securities Carried at Fair Value
 Securities carried at fair value are summarized in the table below (in thousands):
 March 31, 2011
    
    
    December 31, 2010Cost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueREIT Preferred shares
    
    $
    5,646
    
    
    $
    10,547
    
    
    $
    15,757
    
    
    $
    28,547REIT Common shares
    
    
    2,935
    
    
    
    4,148
    
    
    
    3,590
    
    
    
    4,4858,581
    
    
    
    14,695
    
    
    
    19,347
    
    
    
    33,032Loan securities
    
    
    6,911
    
    
    
    14,132
    
    
    
    7,574
    
    
    
    11,981$
    15,492
    
    
    $
    28,827
    
    
    $
    26,921
    
    
    $
    45,013
 During the three months ended March 31, 2011 and 2010, available for sale securities, securities
carried at fair value and loan securities carried at fair value were sold or paid off for total
proceeds of approximately $19,915,000 and $11,407,000, respectively. The gross realized gains on
these sales and payoffs totaled approximately $124,000 and $695,000, in the three months ended
March 31, 2011 and 2010, respectively. For purpose of determining gross realized gains, the cost
of securities is based on specific identification.For the three months ended March 31, 2011 and 2010, the Trust recognized net unrealized gains on
available for sale securities, securities carried at fair value and loan securities carried at fair
value of $3,699,000, and $1,927,000 respectively, as the result of the change in fair value of the
financial assets for which the fair value option was elected.
 16




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##### Table of Contents



7.
    
    Equity Investments
 The Trusts equity investments consist of the following at March 31, 2011 and December 31, 2010 (in
thousands):
 Nominal % Ownership
    
    March 31,
    
    
    December 31,Venture Partner
    
    Equity Investment
    
    at March 31, 2011
    
    2011
    
    
    2010Marc Realty
    
    8 South Michigan LLC
    
    50.0%
    
    $
    7,117
    
    
    $
    7,087Marc Realty
    
    11 East Adams Street LLC
    
    49.0%
    
    
    3,259
    
    
    
    3,223Marc Realty
    
    29 East Madison Street LLC
    
    50.0%
    
    
    7,839
    
    
    
    7,720Marc Realty
    
    Michigan 30 LLC
    
    50.0%
    
    
    12,159
    
    
    
    12,080Marc Realty
    
    Brooks Building LLC
    
    50.0%
    
    
    7,727
    
    
    
    7,452Marc Realty
    
    High Point Plaza LLC
    
    50.0%
    
    
    6,290
    
    
    
    6,275Marc Realty
    
    Salt Creek LLC
    
    50.0%
    
    
    2,336
    
    
    
    2,344Marc Realty
    
    1701 Woodfield LLC
    
    50.0%
    
    
    4,158
    
    
    
    4,221Marc Realty
    
    River Road LLC
    
    50.0%
    
    
    4,101
    
    
    
    4,123Marc Realty
    
    3701 Algonquin Road LLC
    
    50.0%
    
    
    2,991
    
    
    
    2,931Marc Realty
    
    Enterprise Center LLC
    
    50.0%
    
    
    2,898
    
    
    
    3,018Marc Realty
    
    900 Ridgebrook LLC
    
    50.0%
    
    
    1,618
    
    
    
    1,676Sealy
    
    Northwest Atlanta Partners LP
    
    60.0%
    
    
    1,887
    
    
    
    2,479Sealy
    
    Newmarket GP LLC
    
    68.0%
    
    
    6,136
    
    
    
    6,647Sealy
    
    Airpark Nashville GP
    
    50.0%
    
    
    2,421
    
    
    
    2,778Inland/Lexington
    
    Concord Debt Holdings LLC
    
    33.3%
    
    
    
    
    
    
    Inland/Lexington
    
    CDH CDO LLC
    
    33.3%
    
    
    
    
    
    
    ROIC
    
    WRT-ROIC Riverside LLC
    
    50.0%
    
    
    7,883
    
    
    
    7,883ROIC
    
    WRT-ROIC Lakeside Eagle LLC
    
    50.0%
    
    
    17,837
    
    
    
    Atrium Holding
    
    WRT-46th Street Gotham LLC
    
    50.0%
    
    
    7,949
    
    
    
    $
    106,606
    
    
    $
    81,937
 The Trust has determined that all of the equity investments,
other than those with Sealy and WRT-ROIC Riverside LLC are VIEs.
The Trust has determined that it is not the primary beneficiary of these investments since the
Trust does not have the power to direct the activities of the investments that most significantly
impact the investments economic performance.The following table reflects the activity of the Trusts equity investments for the period ended
March 31, 2011 (in thousands):
 Marc
    
    
    
    
    
    
    ConcordRealty
    
    
    Sealy
    
    
    Investments
    
    
    ROIC
    
    
    Gotham
    
    
    TotalBalance at December 31, 2010
    
    $
    62,150
    
    
    $
    11,904
    
    
    $
    
    
    
    $
    7,883
    
    
    $
    
    
    
    $
    81,937Contributions
    
    
    1,060
    
    
    
    
    
    
    
    
    
    
    
    18,093
    
    
    
    8,037
    
    
    
    27,190Equity in income (loss)
    
    
    55
    
    
    
    (1,300
    )
    
    
    
    
    
    
    (22
    )
    
    
    (88
    )
    
    
    (1,355
    )Distributions
    
    
    (772
    )
    
    
    (160
    )
    
    
    
    
    
    
    (234
    )
    
    
    
    
    
    
    (1,166
    )Balance at March 31, 2011
    
    $
    62,493
    
    
    $
    10,444
    
    
    $
    
    
    
    $
    25,720
    
    
    $
    7,949
    
    
    $
    106,606
 The Trust has performed an impairment assessment of its joint ventures with Marc Realty and
Sealy. The Trust has determined that the fair value of certain of its investments in these ventures
each marginally exceed their carrying values. While the
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ventures continue to aggressively market available space for lease and work with existing tenants
for lease renewal, declines in occupancy could cause impairment of certain of the Trusts ventures
that could be material.
 8.
    
    Debt
 Mortgage Loans PayableThe Trust had outstanding mortgage loans payable of $212,155,000 and $230,443,000 at March 31, 2011
and December 31, 2010, 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, 2011 and December 31, 2010 are summarized as
follows (in thousands):
 Location of
    
    
    
    
    
    Spread Over
    
    
    Interest Rate at
    
    
    March 31,
    
    
    December 31,Collateral
    
    Maturity

    
    LIBOR/Prime
    
    
    March 31, 2011
    
    
    2011
    
    
    2010Andover, MA
    
    Mar 2011
    
    
    
    
    
    
    N/A
    
    
    $
    
    
    
    $
    6,135S. Burlington, VT
    
    Mar 2011
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    2,629Various
    
    Jun 2011
    
    
    
    
    
    
    N/A
    
    
    
    
    
    
    
    19,002Chicago, IL
    
    Apr 2012
    
    
    
    
    
    
    6.25
    %
    
    
    8,900
    
    
    
    9,100Amherst, NY
    
    Oct 2013
    
    
    
    
    
    
    5.65
    %
    
    
    16,007
    
    
    
    16,116Meriden, CT
    
    Feb 2014
    
    
    
    
    
    
    5.83
    %
    
    
    23,875
    
    
    
    23,875Indianapolis, IN
    
    Apr 2015
    
    
    
    
    
    
    5.82
    %
    
    
    4,226
    
    
    
    4,245Chicago, IL
    
    Mar 2016
    
    
    
    
    
    
    5.75
    %
    
    
    20,749
    
    
    
    20,828Houston, TX
    
    Apr 2016
    
    
    
    
    
    
    6.32
    %
    
    
    59,418
    
    
    
    60,351Lisle, IL
    
    Jun 2016
    
    
    
    
    
    
    6.26
    %
    
    
    23,859
    
    
    
    23,905Lisle, IL
    
    Mar 2017
    
    
    
    
    
    
    5.55
    %
    
    
    5,600
    
    
    
    5,600Orlando, FL
    
    Jul 2017
    
    
    
    
    
    
    6.40
    %
    
    
    38,521
    
    
    
    38,657Plantation, FL
    
    Apr 2018
    
    
    
    
    
    
    6.48
    %
    
    
    11,000
    
    
    
    $
    212,155
    
    
    $
    230,443
 The fair value of the Trusts mortgage loans payable, loans payable and revolving line of credit
are less than their current carrying value by $20,873,000 and $22,042,000 at March 31, 2011 and
December 31, 2010, respectively.
 9.
    
    Revolving Line of Credit
 On March 3, 2011 the Trust amended its existing revolving line of credit with KeyBank. Under the
modified terms the Trust can borrow on a revolving basis up to $50,000,000 with an accordion
feature of up to $150,000,000. The revolving line of credit bears interest at Libor plus 3% and
has a maturity date of March 3, 2014 with a one year option to extend the maturity date to March 3,
2015.The Trust must comply with financial covenants on an ongoing basis. The covenants are tested as of
the end of each quarter based upon results for the most recently ended quarter. The Trust was in
compliance of its financial covenants under its revolving line of credit as of March 31, 2011.The revolving credit line is recourse and as such is effectively collateralized by 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.
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The outstanding balance under the facility was $33,875,000 and $25,450,000 at March 31, 2011 and
December 31, 2010. The Trust is required to pay a commitment fee on the unused portion of the line,
which amounted to approximately $9,000 and $22,000 for the three months ended March 31, 2011 and
2010.
 10.
    
    Common Shares
 The following table sets forth information relating to sales of Common Shares during the three
months ended March 31, 2011:
 Number of SharesDate of Issuance
    
    Issued
    
    Price per Share
    
    Type of OfferingJanuary 15, 2011
    
    
    58,161
    
    
    $
    11.70
    
    
    DRIP (1)
 
 (1)
    
    The Trusts Dividend Reinvestment and Stock Purchase Plan. 11.
    
    Discontinued Operations
 In addition to the Trusts properties in Athens, Georgia, Lafayette, Louisiana, Knoxville,
Tennessee and Sherman, Texas that were previously classified as discontinued operations, in January
2011 another retail property in St. Louis, Missouri has also been classified as discontinued
operations. In February 2011 the Trust entered into agreements to sell the St. Louis, Missouri, and
Knoxville, Tennessee properties, each subject to the respective buyers due diligence.Results for discontinued operations for the three months ended March 31, 2011 and 2010 are as
follows (in thousands):
 2011
    
    
    2010Revenues
    
    $
    139
    
    
    $
    295Operating expenses
    
    
    (90
    )
    
    
    (17
    )Depreciation and amortization
    
    
    (2
    )
    
    
    (31
    )Income from discontinued operations
    
    $
    47
    
    
    $
    247
 12.
    
    Commitments 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.Concord CDO-1 LitigationIn January 2010, CDFT submitted for cancellation certain bonds issued by CDO-1 and held by CDFT.
The trustee for CDO-1 refused to cancel such bonds and CDO-1 brought an action in the Delaware
Court of Chancery seeking declaratory relief that such bonds should be cancelled and no longer
remains outstanding. Pending the courts decision, the trustee escrowed all payments on account of
the bonds and distributions payable to CDFT from CDO-1s assets. In addition, the trustee also
escrowed any principal payments that could otherwise have been used for reinvestment by CDO-1 for
additional or replacement assets. In May 2010 the Delaware Court of Chancery issued a ruling that
the bonds submitted for cancellation should be deemed no longer outstanding effective January 2010.
The trustee appealed the ruling and on March 4, 2011, the Delaware Supreme Court affirmed the
Delaware Court of Chancerys ruling that the bonds submitted for cancellation should be deemed no
longer outstanding effective January 2010. As a result, in April 2011 the trustee began releasing
the funds held in escrow thereby enabling CDO-1 to make all current and past due payments on its
remaining bonds as well as to pay
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distributions to CDFT, which distributions will be used by CDFT to repay the loans plus accrued
interest totalling $4,364,000 due to the Trust.Tenant MattersThe lease term with respect to the Trusts property located in Churchill, Pennsylvania expired on
December 31, 2010. CBS Corporation (CBS), the lessee of the property, elected not to renew the
lease and, in anticipation of this lease termination and surrender of the property, a review of the
condition of the property was performed by the Trust. In the Trusts view, the property is in need
of substantial repairs and refurbishing in order for the tenant to comply with the surrender
conditions. The Trust advised CBS of these issues and no resolution was reached with CBS after
numerous discussions. Accordingly, in May 2010 the Trust brought an action in Pennsylvania State
Court, Alleghany County against CBS seeking damages for, among other things, CBS failure to
restore the property to the condition necessary to comply with its surrender obligations. The case
is currently in the discovery phase.
 13.
    
    Related-Party Transactions
 FUR AdvisorsThe 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 accordance with the terms of the
Advisory Agreement. In addition, FUR Advisors or its affiliate is also entitled to receive
property and construction management fees subject to the approval of the independent Trustees of
the Trust.The following table sets forth the fees and reimbursements paid by the Trust for the three months
ended March 31, 2011 and 2010 to FUR Advisors and Winthrop Management (in thousands):
 For the Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Base Asset Management
    
    $
    1,720
    
    
    $
    1,024WRP Sub-Management LLC Credit
    
    
    
    
    
    
    (52
    )Property Management
    
    
    132
    
    
    
    59$
    1,852
    
    
    $
    1,031
 Base Asset Management FeeEffective 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 such that the fee is to be
calculated on the actual issuance price of Common Shares instead of a fixed price for Common Shares
issued prior to January 1, 2009. Additionally, FUR Advisors receives a fee equal to 0.25% of any
equity contributions by an unaffiliated third party to a venture managed by the Trust.Winthrop ManagementWinthrop 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. Winthrop Management receives a property management fee pursuant to the terms of
individual property management agreements.
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14.
    
    Reportable Segments
 The Financial Accounting Standards Board (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 operating properties segment includes all of the Trusts wholly and partially owned operating
properties. The loan assets segment includes all of the Trusts activities related to real estate
loans including loans receivable, loan securities and equity investments in loan related entities.
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, 2011 and December 31, 2010 (in thousands):
 March 31,
    
    
    December 31,2011
    
    
    2010Operating properties
    
    $
    378,529
    
    
    $
    373,142Loan assets
    
    
    157,225
    
    
    
    134,269REIT securities
    
    
    14,695
    
    
    
    33,032CorporateCash and cash equivalents
    
    
    21,240
    
    
    
    45,257Restricted cash
    
    
    30,648
    
    
    
    8,593Accounts receivable and prepaids
    
    
    12,534
    
    
    
    12,402Deferred financing costs
    
    
    1,479
    
    
    
    1,158Discontinued operations
    
    
    3,710
    
    
    
    2,275Total Assets
    
    $
    620,060
    
    
    $
    610,128
 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, 2011 and
March 31, 2010 (in thousands):
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For the Three Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010Operating PropertiesRents and reimbursements
    
    $
    10,986
    
    
    $
    9,320Operating expenses
    
    
    (4,045
    )
    
    
    (1,949
    )Real estate taxes
    
    
    (1,255
    )
    
    
    (720
    )Equity in loss of Sealy Northwest Atlanta
    
    
    (592
    )
    
    
    (175
    )Equity in loss of Sealy Airpark Nashville
    
    
    (197
    )
    
    
    (209
    )Equity in loss of Sealy Newmarket
    
    
    (511
    )
    
    
    (219
    )Equity in income of Marc Realty investment
    
    
    55
    
    
    
    76Operating income
    
    
    4,441
    
    
    
    6,124Depreciation and amortization expense
    
    
    (3,481
    )
    
    
    (2,300
    )Interest expense
    
    
    (3,819
    )
    
    
    (3,193
    )Operating properties net income (loss)
    
    
    (2,859
    )
    
    
    631Loan AssetsInterest and discount accretion
    
    
    9,214
    
    
    
    2,462Equity in earnings of preferred equity
investment of Marc Realty
    
    
    83
    
    
    
    83Unrealized gain (loss) on loan securities carried at fair value
    
    
    2,813
    
    
    
    (613
    )Equity in income of ROIC Riverside
    
    
    234
    
    
    
    Equity in loss of ROIC Lakeside Eagle
    
    
    (256
    )
    
    
    Equity in loss of 46th Street Gotham
    
    
    (88
    )
    
    
    Operating income
    
    
    12,000
    
    
    
    1,932General and administrative expense
    
    
    (4
    )
    
    
    (10
    )Interest expense
    
    
    (157
    )
    
    
    Loan assets net income
    
    
    11,839
    
    
    
    1,922REIT SecuritiesInterest and dividends
    
    
    458
    
    
    
    747Gain on sale of securities carried at fair value
    
    
    124
    
    
    
    695Unrealized gain on securities carried at fair value
    
    
    886
    
    
    
    2,540Operating income
    
    
    1,468
    
    
    
    3,982Net Income
    
    
    10,448
    
    
    
    6,535Reconciliations to GAAP Net Income:Corporate Income (Expense)Interest income
    
    
    93
    
    
    
    37Interest expense
    
    
    (637
    )
    
    
    (458
    )General and administrative
    
    
    (2,520
    )
    
    
    (1,897
    )State and local taxes
    
    
    (29
    )
    
    
    (14
    )Income from continuing operations before
non-controlling interest
    
    
    7,355
    
    
    
    4,203Non-controlling interest
    
    
    (204
    )
    
    
    (245
    )Income from continuing operations
attributable to Winthrop Realty Trust
    
    
    7,151
    
    
    
    3,958Income from discontinued operations
attributable to Winthrop Realty Trust
    
    
    47
    
    
    
    247Net Income Attributable to
Winthrop Realty Trust
    
    $
    7,198
    
    
    $
    4,205Capital ExpendituresOperating properties
    
    $
    2,819
    
    
    $
    627
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15.
    
    Variable Interest Entities
 Consolidated Variable Interest EntitiesAndover Operating Property The lease agreement executed in January 2010 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 prior to January 2013. 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 VIE 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 land of $1,200,000, building of
$6,181,000 and lease intangibles of $1,488,000. Prior to the execution of the lease agreement, the
Andover property was not considered a VIE but it has been consolidated since its acquisition.
There is no mortgage debt associated with this property.Deer Valley Medical Center Operating Property The Trust has concluded that its venture, WRT-DV
LLC (WRT-DV), the entity that owns the property, is a VIE. This assessment is primarily based on
the fact that the equity investment at risk is not sufficient to finance its activities without
additional subordinated financial support.Pursuant to the terms of WRT-DVs operating agreement, the Trust receives a priority return on
$7,900,000 of its invested capital, with the balance of the capital being allocated 96.5% to the
Trust and 3.5% to its joint venture partner, Fenway. The Trust has effectively all control rights
with respect to WRT-DV. Therefore the Trust has determined it is the primary beneficiary and
consolidates the venture which owns the operating property.The carrying amounts of the Deer Valley property include land and building of $10,037,000 and lease
intangibles of $2,263,000. There is no mortgage debt associated with this property.Variable Interest Entities Not ConsolidatedEquity Method InvestmentsConcord and CDH CDO The Trust has one-third equity interests in each of the separate entities
that resulted from the Trusts reorganization of its Lex-Win investment, Concord and CDH CDO
(collectively, the Concord Investments). The Trust has determined that each of the Concord
Investments are variable interests in VIEs because the equity investment at risk in the Concord
Investments is not sufficient to finance their activities without additional subordinated financial
support. The Trust has determined that it is not the primary beneficiary of the Concord
Investments as it shares equally in the power to make decisions that
most effect the economics of the entity.At March 31, 2011, the carrying value of the Trusts Concord Investments is zero. The Trust does
not have the current intent to provide financial or other support to the Concord Investments and
the obligations of the Concord Investments are non-recourse to the Trust.Marc Realty Equity Investments and Preferred Equity Investment The Trust has concluded that the
12 Marc Realty equity investments and the one preferred equity investment are variable interests in
VIEs. 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. At March 31, 2011, the Trusts investment in the Marc Realty equity investments was
$62,493,000 and its investment in the preferred equity investment was $4,034,000.WRT-ROIC Lakeside Eagle LLC and WRT-46th Street Gotham LLC The Trust has entered into two
separate 50/50 joint ventures WRT-ROIC Lakeside Eagle LLC and WRT-46th Street Gotham LLC for the
purpose of acquiring certain loan receivables collateralized by real estate. In both cases the
joint venture entities have been identified as VIEs because the only
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assets associated with these
separate single purpose entities are the underlying loans which the Trust has determined are
variable interests in VIEs because the equity investments at risk at the borrowing entities are
not considered sufficient for the entity to finance its activities without additional subordinated
financial support.Based on the 50/50 ownership and shared decision making, the Trust has determined that none of the
members are considered to be most closely aligned with the business. As such, the Trust has
determined that it is not the primary beneficiary of these loan asset investments as it shares
equally in the power to make decisions that most effect the economics
of the entity. At March 31, 2011, the Trusts investment in the WRT-ROIC
Lakeside Eagle LLC and WRT-46th Street Gotham LLC equity investments was $17,837,000 and $7,949,000
respectively.Loans Receivable and Loan SecuritiesThe 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.Certain loans receivable and loan securities which have been determined to be VIEs are performing
assets, meeting their debt service requirements, and the borrowers hold title to the collateral. In
these cases the borrower has the power to direct the activities that most significantly impact the
economic performance of the VIE, including management and leasing activities. In the event of
default under these loans the Trust only has protective rights and has the risk to absorb losses
only to the extent of its loan investment. The borrower has been determined to be the primary
beneficiary for these performing assets.The Trust has determined that it does not currently have the power to direct the activities of the
ventures collateralizing any of 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 receivable and
real estate debt investments.
 16.
    
    Subsequent Events
 On April 4, 2011, the Trust made a $2,000,000 secured bridge loan to 446-High Line, LLC (446 High
Line), the entity that ultimately holds the leasehold interest in the property located at 450 West
14th Street, New York, New York.On April 6, 2011, the Trust closed a public offering of 5,750,000 Common Shares at a price of
$11.25 per share before underwriters discount and received net proceeds of approximately
$61,566,000. A portion of the proceeds were utilized to pay down our revolving line of credit.On April 6, 2011, the Trust acquired an ownership interest in an entity that holds an approximately
$2,500,000 non-performing junior mezzanine loan indirectly secured by a 194 unit apartment complex
located in Jacksonville, Florida. The loan matured on March 30, 2011 and the venture commenced
foreclosure on its collateral.
 24




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##### Table of Contents



ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 i
  Overview
     25




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##### Table of Contents



Loan Assets
   Operating Properties
 Consolidated Operating Properties 
    Sealy Equity Investments in Operating Properties
  26




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##### Table of Contents



Marc Realty Equity Investments in Operating Properties-
    REIT Securities
  Liquidity and Capital Resources
    
    
    the use of cash and cash equivalents;
    
    rents and reimbursements received from our operating properties;
    
    payments received under our loan assets;
    
    disposition of REIT securities;
    
    sale of existing assets;
    
    cash distributions from joint ventures;
    
    borrowings under our credit facilities;
    
    asset specific borrowings; and
    
    the issuance of equity and debt securities.
 Debt Maturities
  27




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##### Table of Contents



Cash Flows
   For Three Months Ended March 31,2011
    
    
    2010Net cash flow provided by operating activities
    
    $
    4,215
    
    
    $
    3,871Net cash flow (used in) provided by investing activities
    
    
    (28,666
    )
    
    
    10,785Net cash flow provided by (used in) financing activities
    
    
    434
    
    
    
    (4,558
    )Decrease in cash and cash equivalents
    
    $
    (24,017
    )
    
    $
    10,098
 Operating Activities
  Investing Activities
   
    
    $18,093,000 for investment in our Lakeside Eagle loan joint venture;
 28




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##### Table of Contents




    
    $8,037,000 for investment in our Gotham loan joint venture;
    
    $7,000,000 for investment in Vintage Housing receivable;
    
    $3,293,000 for investment in capital and tenant improvements at our operating
properties;
    
    $2,773,000 for additional loan advances under existing facilities;
    
    $1,060,000 for investment in our Marc Realty equity investments; and
    
    $568,000 for purchases of REIT securities carried at fair value.
  Financing Activities
   
    
    $27,324,000 drawn down on our revolving line of credit;
    
    $15,150,000 in proceeds from the issuance of the senior participation in the San
Marbeya loan; and
    
    $11,000,000 in proceeds from the financing of our Plantation, Florida property.
  
    
    $29,288,000 for mortgage loan repayments which included $8,764,000 for the satisfaction
of loans payable on our Andover, Massachusetts and Burlington, Vermont properties which
matured in March 2011, and $19,138,000 for the satisfaction of our loan payable which was
scheduled to mature in June 2011;
    
    $18,899,000 for payments on our revolving line of credit; and
    
    $4,392,000 for dividend payments on our Common Shares.
 Future Cash Commitments
 Future Funding Requirements
  Common Share Dividends
  29




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##### Table of Contents



Comparability of Financial Data from Period to Period
  Results of Operations
  Ø
    
    Operating Properties  our wholly and partially owned operating properties;Ø
    
    Loan Assets  our loans receivable, loan securities carried at fair value, and equity investments in loan assets;Ø
    
    REIT Securities  our ownership of equity and debt securities in other real estate investment trusts; andØ
    
    Corporate  non-segment specific results which includes interest on cash reserves,
general and administrative expenses and other non-segment specific income and expense items.
  March 31,
    
    
    December 31,2011
    
    
    2010Operating properties
    
    $
    378,529
    
    
    $
    373,142Loan assets
    
    
    157,225
    
    
    
    134,269REIT securities
    
    
    14,695
    
    
    
    33,032CorporateCash and cash equivalents
    
    
    21,240
    
    
    
    45,257Restricted cash
    
    
    30,648
    
    
    
    8,593Accounts receivable and prepaids
    
    
    12,534
    
    
    
    12,402Deferred financing costs
    
    
    1,479
    
    
    
    1,158Discontinued Operations
    
    
    3,710
    
    
    
    2,275Total Assets
    
    $
    620,060
    
    
    $
    610,128
     30




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##### Table of Contents



Comparison of Three Months ended March 31, 2011 versus Three Months ended March 31, 2010
  2011
    
    
    2010Operating properties
    
    $
    (2,859
    )
    
    $
    631Loan assets
    
    
    11,839
    
    
    
    1,922REIT securities
    
    
    1,468
    
    
    
    3,982Corporate expenses
    
    
    (3,093
    )
    
    
    (2,332
    )Income from continuing operations
    
    $
    7,355
    
    
    $
    4,203
 Operating Properties
  2011
    
    
    2010Rents and reimbursements
    
    $
    10,986
    
    
    $
    9,320Operating expenses
    
    
    (4,045
    )
    
    
    (1,949
    )Real estate taxes
    
    
    (1,255
    )
    
    
    (720
    )Equity in income of Marc Realty investments
    
    
    55
    
    
    
    76Equity in loss of Sealy Northwest Atlanta
    
    
    (592
    )
    
    
    (175
    )Equity in loss of Sealy Airpark Nashville
    
    
    (197
    )
    
    
    (209
    )Equity in loss of Sealy Newmarket
    
    
    (511
    )
    
    
    (219
    )Operating income
    
    
    4,441
    
    
    
    6,124Depreciation and amortization expense
    
    
    (3,481
    )
    
    
    (2,300
    )Interest expense
    
    
    (3,819
    )
    
    
    (3,193
    )Net income (loss)
    
    $
    (2,859
    )
    
    $
    631
  
    
    a $2,096,000 increase in operating expenses due primarily to a $951,000 increase in
costs at our Churchill, Pennsylvania property as a result of the termination of the CBS net
lease as of December 31, 2010, a $424,000 increase in legal and professional fees related
to tenant disputes primarily in connection with the Churchill tenant litigation and
$735,000 of operating expenses at our four 2010 property acquisitions;
    
    a decrease of $170,000 in rents and reimbursements from our two Lisle, Illinois
properties due to an approximate 13% decrease in average occupancy at one of the properties
and an approximate 3% decrease at the other property for the three months ended March 31,
2011 as compared to the three months ended March 31, 2010;
    
    a $697,000 increase in losses from our Sealy equity investments due primarily to a
$417,000 increase in loss related to our Northwest Atlanta, Georgia property as a result of
default interest incurred on the first mortgage loan, and a $292,000 increase in loss at
our Newmarket office complex in Atlanta, Georgia which experienced a 16% loss in occupancy
at March 31, 2011 from March 31, 2010;
    
    a decrease of $83,000 in rents and reimbursements at our One East Erie property due to
the turnover of tenants;
 31




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##### Table of Contents




    
    a decrease of $92,000 in rents and reimbursements at our River City property as a result
of an approximate 7% decrease in average occupancy; and
    
    a decrease of $110,000 in rents and reimbursements at our Churchill, Pennsylvania
property;Partially offset by:
    
    rents and reimbursements of $1,773,000 from our four 2010 property acquisitions;
    
    an increase of $77,000 in rents and reimbursements at our Jacksonville, Florida property
which was leased effective February 1, 2010; and
    
    an increase of $245,000 in rents and reimbursements at our Andover, Massachusetts
property which was leased effective March 18, 2010;
  Loan Assets
  2011
    
    
    2010Interest
    
    $
    2,710
    
    
    $
    722Discount accretion
    
    
    6,504
    
    
    
    1,740Equity in earnings of preferred equity investment in Marc Realty
    
    
    83
    
    
    
    83Equity in earnings of ROIC-Riverside LLC
    
    
    234
    
    
    
    Equity in loss of WRT-46th Street Gotham LLC
    
    
    (88
    )
    
    
    Equity in loss of ROIC-Lakeside Eagle LLC
    
    
    (256
    )
    
    
    Unrealized gain (loss) on loan securities carried at fair value
    
    
    2,813
    
    
    
    (613
    )Operating income
    
    
    12,000
    
    
    
    1,932General and administrative expense
    
    
    (4
    )
    
    
    (10
    )Interest expense
    
    
    (157
    )
    
    
    Net income
    
    $
    11,839
    
    
    $
    1,922
  
    
    a $2,813,000 unrealized gain on loan securities carried at fair value recognized in 2011
compared to a $613,000 unrealized loss recognized in the first three months of 2010;
    
    a $4,764,000 increase in discount accretion due primarily to the recognition of
$3,504,000 as a result of the early pay off at face of our Metropolitan Tower loan; and
    
    a $1,988,000 increase in interest income due primarily to the acquisition of new loans
throughout 2010.
 th
 32




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##### Table of Contents



REIT Securities
  2011
    
    
    2010Interest and dividends
    
    $
    458
    
    
    $
    747Gain on sale of securities carried at fair value
    
    
    124
    
    
    
    695Unrealized gain on securities carried at fair value
    
    
    886
    
    
    
    2,540Operating income
    
    $
    1,468
    
    
    $
    3,982
  
    
    a $1,654,000 reduction in unrealized gain on securities carried at fair value primarily
as a result of our divestiture of securities;
    
    a $571,000 reduction in realized gain on the sale of securities carried at fair value;
and
    
    a $289,000 decrease in interest and dividend income primarily due to the sale of certain
securities.
 Corporate
  2011
    
    
    2010Interest income
    
    $
    93
    
    
    $
    37General and administrative
    
    
    (2,520
    )
    
    
    (1,897
    )Interest expense
    
    
    (637
    )
    
    
    (458
    )State and local taxes
    
    
    (29
    )
    
    
    (14
    )Operating loss
    
    $
    (3,093
    )
    
    $
    (2,332
    )
   Discontinued Operations
  33




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##### Table of Contents



Critical Accounting Policies and Estimates
  Recently Issued Accounting Standards
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
    Change in LIBOR(2)-0.24%
    
    
    1%
    
    
    2%
    
    
    3%Change in consolidated interest expense
    
    $
    (82
    )
    
    $
    339
    
    
    $
    677
    
    
    $
    1,016Pro-rata share of change in interest expense
of debt on non-consolidated entities (1)
    
    
    (18
    )
    
    
    76
    
    
    
    232
    
    
    
    416(Increase) decrease in net income
    
    $
    (100
    )
    
    $
    415
    
    
    $
    909
    
    
    $
    1,432
 
 (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.(2)
    
    The one-month LIBOR rate at March 31, 2011 was 0.24%.  
 ITEM 4. CONTROLS AND PROCEDURES
   34




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##### Table of Contents



Other Matters
  
 PART II. OTHER INFORMATION
 
 ITEM 6. EXHIBITS
  35




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##### Table of Contents



Winthrop Realty TrustDate:  May 6, 2011
    By:
    /s/ Michael L. AshnerMichael L. AshnerChief Executive OfficerDate:  May 6, 2011
    By:
    /s/ Thomas C. StaplesThomas C. StaplesChief Financial Officer 36




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##### Table of Contents



PageExhibit
    
    Description
    
    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
    
    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.
    
    10.2
    
    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.
    
    10.3
    
    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.
    
    10.4
    
    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, 2010.
    
    10.5
    
    Exclusivity Services Agreement between the
Trust and Michael L. Ashner  Incorporated
    
    
 37




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##### Table of Contents



PageExhibit
    
    Description
    
    Numberby reference to Exhibit 10.4 to the Trusts Form 8-K filed
December 1, 2003.10.6
    
    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.
    
    10.7
    
    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.
    
    10.8
    
    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.
    
    10.9
    
    Agreement, dated as of July 1, 2009,
among Gerald Nudo, Laurence Weiner and WRT Realty L.P. Incorporated by reference to Exhibit 10.14 to the
Trusts Form 10-Q for the period ended June 30, 2009 filed August 10,
2009.
    
    10.10
    
    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.
    
    10.11
    
    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.
    
    10.12
    
    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.
    
    10.13
    
    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.
    
    10.14
    
    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.
    
    10.15
    
    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.
    
    10.16
    
    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.
    
    10.17
    
    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, 2009.
    
    10.18
    
    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, 2009.
    
    10.19
    
    Amended and Restated Loan Agreement,
dated as of March 3, 2011, between WRT Realty L.P. and KeyBank,
National Association  Incorporated by reference to Exhibit
10.19 to the Trusts 10-K filed March 16, 2011.
    
    
 38




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##### Table of Contents



PageExhibit
    
    Description
    
    Number10.20
    
    Guaranty
from Winthrop Realty Trust and certain of its Subsidiaries in favor
of KeyBank, National Association  Incorporated by reference to
Exhibit 10.20 to the Trusts Form 10-K filed March 16, 2011.
    
    31
    
    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.
    
    *
   39