10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2010

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

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

Ohio	34-6513657
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
7 Bulfinch Place, Suite 500, Boston, Massachusetts	02114
(Address of principal executive offices)	(Zip Code)

(617) 570-4614
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Common shares, $1.00 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No þ

As of March 1, 2011, there were 27,088,347 Common Shares outstanding.

At June 30, 2010, the aggregate market value of the Common Shares held by non-affiliates was $229,464,877.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders, which is expected to be filed with the Securities and Exchange Commission within 120 days after the Registrant’s fiscal year ended December 31, 2010, are incorporated by reference into Part III hereof.

WINTHROP REALTY TRUST
CROSS REFERENCE SHEET PURSUANT TO ITEM G,
GENERAL INSTRUCTIONS TO FORM 10-K

Item of Form 10-K	Page
PART I
1. Business		4
1A. Risk Factors		12
1B. Unresolved Staff Comments		21
2. Properties		22
3. Legal Proceedings		33
4. Reserved		33
PART II
5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities		34
6. Selected Financial Data		37
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
7A. Quantitative and Qualitative Disclosures about Market Risk		54
8. Financial Statements and Supplementary Data		55
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		104
9A. Controls and Procedures		104
9B. Other Information		104
PART III
10. Directors, Executive Officers and Corporate Governance		105
11. Executive Compensation		105
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		105
13. Certain Relationships and Related Transactions and Director Independence		105
14. Principal Accountant Fees and Services		105
PART IV
15. Exhibits and Financial Statement Schedules		106
(a) Financial Statements and Financial Statement Schedule
(b) Exhibits
Signatures		107
Schedule III — Real Estate and Accumulated Depreciation		108
Exhibit Index		110
Exhibit 10.19
Exhibit 10.20
Exhibit 21
Exhibit 23.1
Exhibit 23.2
Exhibit 24
Exhibit 31
Exhibit 32
Exhibit 99.1

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CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS

Any statements included in this prospectus, including any statements in the document that are incorporated by reference herein that are not strictly historical are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements contained or incorporated by reference herein should not be relied upon as predictions of future events. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans, intentions or anticipated or projected events, results or conditions. Such forward-looking statements are dependent on assumptions, data or methods that may be incorrect or imprecise and they may be incapable of being realized. Such forward-looking statements include statements with respect to:

• the declaration or payment of distributions by us;

• the ownership, management and operation of properties;

• potential acquisitions or dispositions of our properties, assets or other businesses;

• our policies regarding investments, acquisitions, dispositions, financings and other matters;

• our qualification as a real estate investment trust under the Internal Revenue Code of 1986, as amended, which we refer to as the Code;

• the real estate industry and real estate markets in general;

• the availability of debt and equity financing;

• interest rates;

• general economic conditions;

• supply of real estate investment opportunities and demand;

• trends affecting us or our assets;

• the effect of acquisitions or dispositions on capitalization and financial flexibility;

• the anticipated performance of our assets and of acquired properties and businesses, including, without limitation, statements regarding anticipated revenues, cash flows, funds from operations, earnings before interest, depreciation and amortization, property net operating income, operating or profit margins and sensitivity to economic downturns or anticipated growth or improvements in any of the foregoing; and

• our ability, and that of our assets and acquired properties and businesses to grow.

You are cautioned that, while forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance and they involve known and unknown risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained or incorporated by reference in this report and any amendment hereof, including, without limitation, the information set forth in “ITEM 1A- Risk Factors” below or in any risk factors in documents that are incorporated by reference in this report, identifies important factors that could cause such differences. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may reflect any future events or circumstances.

SHARE SPLIT

In November 2008 Winthrop Realty Trust effected a 1-for-5 reverse stock split, which we refer to as the Reverse Split, of its Common Shares of Beneficial Interest, which we refer to as Common Shares, pursuant to which each of five shares of its Common Shares issued and outstanding as of the close of the market on November 28, 2008 were automatically combined into one Common Share, subject to the elimination of fractional shares. All Common Share and per Common Share data included in this Annual Report on Form 10-K and the accompanying Consolidated Financial Statements and Notes thereto have been adjusted to reflect this Reverse Split.

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PART I

ITEM 1. BUSINESS

General

Winthrop Realty Trust is a real estate investment trust formed under the laws of the State of Ohio. We conduct our business through our wholly owned operating partnership, WRT Realty L.P., a Delaware limited partnership, which we refer to as the Operating Partnership. All references to the “Trust”, “we”, “us”, “our”, “WRT” or the “Company” refer to Winthrop Realty Trust and its consolidated subsidiaries, including the Operating Partnership.

We are engaged in the business of owning real property and real estate related assets which we categorize into three reportable segments: (i) the ownership of investment properties, including properties in joint ventures consolidated or accounted for on a equity method basis, which we refer to as operating properties; (ii) the origination and acquisition of senior loans, mezzanine loans and debt securities secured directly or indirectly by commercial and multi-family real property, which loans we refer to as loan assets; and (iii) the ownership of equity and debt securities in other real estate investment trusts (REITs), which we refer to as REIT securities.

At December 31, 2010 we held (i) interests in operating properties totaling $373,142,000 and containing approximately 8.5 million square feet of rentable space, (ii) loan assets totaling $134,269,000, (iii) REIT securities with a market value of $33,032,000 and (iv) cash and cash equivalents of $45,257,000.

Our executive offices are located at 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114 and Two Jericho Plaza, Jericho, NY 11753. Our telephone number is (617) 570-4614 and our web site is located at http://www.winthropreit.com. The information contained on our web site does not constitute part of this Annual Report on Form 10-K. On our web site you can obtain, free of charge, a copy of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934, as amended, as soon as reasonably practicable after we file such material electronically with, or furnish it to, the Securities and Exchange Commission, which we refer to as the SEC.

History

We began operations in 1961 under the name First Union Real Estate Equity and Mortgage Investments. Effective December 31, 2003, FUR Investors LLC acquired 32% of our then outstanding Common Shares and FUR Advisors LLC, which we refer to as FUR Advisors or our Advisor, was retained as our external advisor, our Board of Trustees was substantially reconstituted and Michael Ashner was appointed Chief Executive Officer and he entered into an exclusivity agreement with the Trust. Since January 1, 2004, we have been externally managed by FUR Advisors. Both FUR Advisors and FUR Investors LLC are separate entities controlled by Mr. Ashner, owned by our current executive officers and senior management, including Mr. Ashner, and members of senior management of AREA Property Partners, formerly known as Apollo Real Estate Advisors Inc., a New York based real estate investment fund.

Commencing January 1, 2004, we began to seek out more opportunistic investments across the real estate spectrum, whether they be operating properties, loan assets or REIT securities. On January 1, 2005 we elected to form the Operating Partnership and contributed all of our assets to the Operating Partnership in exchange for 100% of the ownership interests in the Operating Partnership. Our Operating Partnership structure, commonly referred to as an umbrella partnership real estate investment trust, provides us with additional flexibility when acquiring properties as it enables us to acquire properties for cash and/or by issuing to sellers, as a form of consideration, limited partnership interests in our operating partnership thereby enabling us to structure transactions which may defer tax gains for a seller while preserving our available cash for other purposes.

Management

Under the terms of the Advisory Agreement between FUR Advisors and us, FUR Advisors administers our affairs including seeking, servicing and managing our investments. For providing these and other services, FUR Advisors receives a base management fee and is entitled to an incentive fee after common shareholders have received a return of a specified amount which is based on a fixed price for Common Shares outstanding at December 31, 2003 plus the issuance price for Common Shares issued thereafter together with a cumulative 7% annual return thereon. See “Employees” below for a description of the fees payable to FUR Advisors.

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Pursuant to our bylaws, our executive officers are permitted to acquire or dispose of an investment with an aggregate value of $10,000,000 or less without the consent of our Board of Trustees. However, if such transaction is with (i) our Advisor (and any successor advisor), Michael Ashner, or any of their respective affiliates; (ii) certain stated entities which are, or were, affiliated with us; (iii) a beneficial owner of more than 4.9% of our outstanding Common Shares, either directly or upon the conversion of any of our Series B-1 Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, which we refer to as our Series B-1 Preferred Shares, or Series C Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest, which we refer to as our Series C Preferred Shares; or (iv) a beneficial owner of more than 4.9% of any other entity in which we hold a 10% or greater interest, then regardless of the amount of the transaction, such transaction must be approved by a majority of our independent trustees, acting in their capacity as members of our Conflicts Committee.

Investment, Operating and Capital Strategy

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

We are a diversified REIT and as such we are able to invest in transactions which a dedicated REIT with narrow investment parameters would be unable to consider resulting in a broad range of investment opportunities. These opportunities include different investment types, sectors, and geographic areas all at varying levels in the capital stack. As such, from time to time the types of real estate investments we will acquire may vary. In addition, because of our size we are able to make investments in transactions that are smaller and would generally be disregarded by larger real estate investors. In this regard, as opportunities present themselves and as market conditions dictate, we will focus our investment activity in one or more of our three business segments (i) operating properties; (ii) loan assets; and (iii) REIT securities, and aggressively pursue such opportunities. That is, subject to economic and credit market conditions, we will seek to:

• acquire operating properties of specific property types and locations that we believe:

• are undervalued,

• present an opportunity to outperform the marketplace while providing recurring current or potentially recurring cash flow, or

• can provide superior returns through an infusion of capital and/or improved management;

• acquire portfolios or interests in portfolios at properties within characteristics similar to the above;

• acquire loan assets using the same criteria for operating properties, as well as consideration of loan assets that may present an opportunity for us to acquire through foreclosure an equity interest in the underlying real estate collateral;

• acquire securities issued by other REITs we believe are undervalued; and

• divest investments as they mature in value to the point where we may be unlikely to achieve better than market returns in order to redeploy capital to what we believe to be higher yielding opportunities. Consistent with our total return approach to investing, it is not possible to predict when we will exit any particular investment.

We acquire assets through direct ownership as well as through strategic alliances and ventures. Our primary sources of income are rental income and tenant recoveries from leases of our operating properties, interest income and discount accretion from our loan assets, and interest and dividend income and appreciation from our investments in REIT securities.

Based on market conditions in 2010, we focused our investment activity in our loan asset segment. We seek to enter into ventures with third parties who have a presence, experience and expertise in specific geographic areas and/or specific asset types. Further, with respect to ventures that we manage we seek to enhance our total return with asset management and other fees, and promoted economic interests and appreciation. We currently expect that our focus on loan assets will continue in 2011. Currently, we expect to concentrate our investment activities in assets that we believe are higher quality office, retail and multi-family properties along with high-end hospitality assets as we expect these will be the first to recover. We generally do not pursue those investments in which there is a significant component of raw land, development risk, specialty real estate or condominiums, unless the condominium project can be converted to a conventional multi-family property.

To enhance our total return, we utilize leverage. We seek to limit risk associated with utilization of leverage by seeking to make our investments through discrete single purpose entities in which we do not guaranty, other than customary environmental and recourse carve-out guarantees, the debt of our single purpose subsidiaries, thereby limiting the risk of loss to that particular investment or joint venture.

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As a REIT, we are dependent primarily on external equity and debt financing to fund the growth of our business because of the distribution requirements for a REIT which significantly limits our ability to re-invest cash flow and capital proceeds. We have historically used public equity markets, joint venture equity, and secured financing as our primary sources of capital including raising capital through public offerings as we did in September 2010. We expect to continue to fund our investments through one or a combination of: cash reserves, borrowings under our credit facility, redeployment of capital from timely asset sales, property loans, the issuance of debt or equity securities and the formation of joint ventures. Finally, we maintain a stock purchase and dividend reinvestment plan which enables our existing shareholders to reinvest their dividends as well as purchase additional shares at a discounted price.

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Assets

Loan Assets

The following table sets forth certain information relating to our loans receivable, carried at historical cost, and loan securities carried at fair value. All information presented is as of December 31, 2010. Dollars are stated in thousands.

	Loan			Stated Interest	Carrying					Maturity		Senior
Name	Position	Asset Type	Location	Rate (1)	Amount (2)		Par Value			Date (3)		Debt (4)
Loans Receivable
Beverly Hilton (10)	B Note	Hotel	Beverly Hills, CA	Libor + 1.74%	$	7,899	$	10,000			08/09/11	$	166,000
Metropolitan Tower	B Note	Office	New York, NY	Libor + 1.51%		10,312		15,000			11/01/11		81,559
Westwood *	Whole loan	Office	Phoeniz, AZ	11.00%		3,500		3,500			04/30/12		—
Siete Square	B Participation	Office	Phoeniz, AZ	10.37%		2,488		2,500	(5)		06/09/12		3,000
Moffett Towers *	B Note	Office	Sunnyvale, CA	Libor + 6.48%		21,752		21,603			07/31/12		108,786
160 Spear	B Note	Office	San Francisco, CA	9.75%		6,674		15,000	(5)		06/09/13		35,000
160 Spear	Mezzanine	Office	San Francisco, CA	15.00%		3,029		3,000			06/09/13		50,000
Legacy Orchard *	Secured	Corporate Loan	n/a	15.00%		9,750		9,750	(5)		10/31/14		—
San Marbeya *	Whole loan	Multi-Fam	Tempe, AZ	5.88%		26,966		30,930			01/01/15		—
Rockwell *	Mezzanine	Industrial	Shirley, NY	12.00%		255		1,496			05/01/16		17,045
500-512 7th Ave *	B Note	Office	New York, NY	7.19%		9,954		11,638			07/11/16		253,673
180 N. Michigan (6)	Mezzanine	Office	Chicago, IL	8.50%		1,862		1,862			12/31/16		18,080
Wellington Tower	Mezzanine	Mixed use	New York, NY	6.79%		2,456		3,501			07/11/17		22,500
CDH CDO LLC *	Unsecured	n/a	n/a	12.00%		3,498		3,498			12/30/15		—
					$	110,395
Loan Securities
WBCMT 2007 WHL8	CMBS	Hotel	Various	Libor + 1.75%	$	45		1,130			06/09/12		1,470,264
Metropolitan Tower*	Rake Bonds	Office	New York, NY	(7)		6,668		8,748			11/01/11		72,812
West Olive	Rake Bonds	Office	Burbank, CA	(8)		4,606		6,364			02/28/13		15,666
Concord CDO-1 *	CDO Bonds	Various	Various	Libor + 1.20%		662		662	(5)		12/25/46		288,025
					$	11,981
Loans in Equity Investment (9)
Riverside Plaza*	B Note	Retail	Riverside, CA	12.00%	$	7,883		7,800			12/01/12		54,400

*	Loan Asset was acquired by the Trust in 2010. Additional loan asset details are described below.
(1)	Represents contractual interest rates without giving effect to loan discount and accretion. The stated interest rate may be significantly different than the Trust’s effective interest rate on certain loan investments.
(2)	Carrying amount includes all applicable accrued interest and accretion of discount.
(3)	After giving effect to all contractual extensions.
(4)	Debt which is senior to our loan.
(5)	Par Value is presented at the borrowers discounted payoff option (DPO) amount.
(6)	Represents a tenant improvement and capital expenditure loan collateralized by a subordinate mortgage or the ownership interest in the property owner.
(7)	Ranges from Libor + 1.15% to Libor + 1.35%.
(8)	Ranges from Libor + 0.65% to Libor + 1.60%.
(9)	Equity investment amounts are presented based on the Trust’s 50% ownership percentage.
(10)	Under contract to sell at par. Expected closing in July 2011.

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Loan Asset Acquisitions

500-512 Seventh Avenue — New York, New York — B Note — On July 9, 2010 we acquired for $19,825,000 a $23,499,000 performing B note in a first mortgage loan which is subordinate to a $253,673,000 A note in the mortgage loan. The A note and B note are collateralized by a 1,188,000 square foot office building located at 500-512 Seventh Avenue New York, New York. The B note bears interest at 7.19% and has a scheduled maturity date of July 11, 2016. In August, 2010 we sold a participation in the B note as described in the “Loan Asset Modifications” section below.

San Marbeya Apartments — Tempe, Arizona — First Mortgage Loan - On July 23, 2010 we acquired for $26,990,000 a $31,106,000 performing first mortgage loan. The loan is collateralized by a 276 unit apartment complex referred to as San Marbeya Apartments located in Tempe, Arizona. The loan bears interest at a blended rate of 5.88% and has a scheduled maturity date of January 1, 2015. In January 2011 we sold a senior participation in this first mortgage loan as described in the “Loan Asset Modifications” section below.

Rockwell — Shirley, New York — Mezzanine Loan — On August 31, 2010 we acquired from Concord Debt Holdings, LLC, which we refer to as Concord, for $235,000 a $1,497,000 performing mezzanine loan. The loan is collateralized by a 129,660 square foot industrial/warehouse complex in Shirley, New York. The loan bears interest at 12% and has a scheduled maturity date of May 1, 2016.

Legacy Orchard —Corporate Loan - On October 22, 2010 we acquired for $9,750,000 an existing $39,000,000 performing loan made to a private real estate equity fund and then modified the loan to provide for: (i) an interest rate of 15% on the $9,750,000 investment amount; (ii) collateral in the form of a $3,000,000 million letter of credit, a first mortgage on land and a security interest in other assets; (iii) a scheduled maturity date of October 31, 2014 and, (iv) subject to the satisfaction of certain conditions by the borrower a discounted payoff option after one year of $9,750,000.

Westwood Business Park — Phoenix, Arizona — Whole Loan — On October 29, 2010 we acquired for $4,100,000, a first mortgage loan secured by an interest in four class B office buildings, containing 91,100 square feet of office space in Phoenix, Arizona. Upon acquisition of the loan, the borrower made a principal payment of $600,000 and the loan was restructured to reduce the then outstanding principal to $3,500,000 and to provide for a future funding component which allows the borrower to draw up to $400,000 to fund 50% of the tenant improvement and leasing commission costs on new leases. The loan bears interest at 11% and has a scheduled maturity date of October 31, 2011.

Moffett Towers — Sunnyvale, California — B Note - On October 29, 2010 we acquired at par a $21,428,000 senior participation in a B note secured by a first mortgage lien on a 951,000 square foot, recently constructed class A office complex located in Sunnyvale, California. The loan bears interest at Libor plus 6.48% (with a Libor floor of 1.5%) and has a scheduled maturity date of January 31, 2012.

Metropolitan Tower — New York, New York — Rake Bonds — On December 30, 2010, pursuant to a purchase option, we acquired from Concord Debt Funding Trust, which we refer to as CDFT, for $5,250,000 two rake bonds with an aggregate face amount of approximately $8,748,000, a weighted average interest rate of Libor plus 1.30% which have a scheduled maturity date of November 1, 2011. The rake bonds are secured by the 260,000 square feet of office space constituting the office portion of Metropolitan Tower located in New York, New York. On December 30, 2010 in connection with the acquisition of the Metropolitan Tower rake bonds CDFT borrowed $3,498,000 from us in the form of an unsecured loan. The loan bears interest at 12% and has a scheduled maturity date of December 30, 2015.

Loan Asset Modifications

Siete Square — Phoenix, Arizona — B Note Participation — On February 5, 2010, we restructured our loan into a $3,000,000 Sub-Participation A interest which bears interest at 8% and a $4,219,000 Sub-Participation B interest. We sold the Sub-Participation A interest at par to Concord Real Estate CDO-1, Ltd., which was refer to as CDO-1, on the same date.

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500-512 Seventh Avenue — New York, New York — B Note Participation — On August 4, 2010, we restructured our loan and sold a 50% pari passu participation interest in the B note for a purchase price of $9,859,000 which represented one-half of our cost basis in the B note.

San Marbeya Apartments, Tempe, Arizona-First Mortgage Loan — On January 14, 2011, we restructured our loan into 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%. We concurrently sold the senior participation to CDO-1 at par.

Loan Asset Acquisitions and Conversions to Operating Properties

Crossroads II at Meridian, Englewood Colorado- On June 11, 2010 we acquired for $8,100,000 a $10,031,000 non-performing first mortgage loan collateralized by an 118,000 square foot, class A office building located at 9780 Mount Pyramid Court, Englewood Colorado, known as Crossroads II at Meridian. On November 17, 2010 we foreclosed on the first mortgage loan and acquired the property.

Deer Valley Medical Center, Deer Valley, Arizona — On June 28, 2010 we acquired for $10,257,000 a $20,491,000 non-performing first mortgage loan collateralized by an 86,000 square foot, class A medical office building known as the Deer Valley Professional Center. On August 6, 2010 we foreclosed on the first mortgage loan and acquired the property.

Newbury Apartments — Meriden, Connecticut — On September 2, 2010 we acquired from Concord for $550,000 a non-performing mezzanine loan with a face amount of $3,500,000, which was collateralized by a 180 unit multi-family apartment complex located in Meriden, Connecticut. The loan was subordinate to a non-performing first mortgage loan with a principal balance of approximately $23,875,000. On October 29, 2010 we foreclosed on the equity interest in the property owner resulting in our becoming the indirect owner of the property subject to the first mortgage loan.

In February 2011 we reached an agreement with the first mortgage lender 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.

Loan Asset Acquired and Repaid During the Year

Driver Building — San Diego, California — On May 14, 2010 we acquired at par a non-performing $6,540,000 first mortgage loan. On August 27, 2010 we received full repayment on the outstanding principal, stated and defaulted interest as well as late fees.

1701 E. Woodfield Road — Schaumburg, Illinois — On July 1, 2010 we acquired for $8,200,000 a $10,408,000 performing first mortgage loan collateralized by a 174,400 square foot office building located at 1701 E. Woodfield Road, Schaumburg, Illinois, a suburb of Chicago. The property is owned in a joint venture with Marc Realty. Simultaneously with the acquisition of this loan, the venture made a principal payment on the loan of $3,200,000 (both Marc Realty and us contributed 50% each) and the loan was modified to reduce the balance to $5,000,000, increase the interest rate to 8% per annum and extend its maturity to July 1, 2011. The joint venture subsequently repaid the outstanding principal and interest on September 28, 2010 from the proceeds of a new first mortgage loan.

Scripps Center, Costa Mesa, California — Rake Bonds - On July 16, 2010 we acquired from Concord for $1,200,000 two rake bonds with an aggregate face amount of $2,273,000. The bonds were repaid at face on December 1, 2010.

Loan Asset Acquisitions and Other Loan Asset Transaction Activity through our Equity Investments

Riverside Shopping Center, Riverside, California — On June 28, 2010 we formed a 50%-50% joint venture entity which acquired at par a 12% $15,600,000 B participation in a performing $70,000,000 first mortgage loan. The first mortgage loan is collateralized by a 405,000 square foot retail center located in Riverside, California.

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Peter Cooper Village/Stuyvesant Town Investments, New York, New York — On August 6, 2010 we formed a joint venture, PSW NYC LLC, which we refer to as PSW NYC, in which we held a 22.5% interest, to acquire 100% of the $300,000,000 face amount of certain mezzanine loans indirectly collateralized by an 11,227 unit apartment complex in New York City for a purchase price of $45,000,000, with the intention of foreclosing on the collateral. As a result of an action brought by the first mortgage lender PSW NYC was prohibited from foreclosing. To settle the matter with the first mortgage lender, PSW NYC agreed to sell to the first mortgage lender the mezzanine loans for the original cost ($45,000,000) paid by PSW NYC.

Concord, CDH CDO and Lex-Win Concord LLC — On August 26, 2010, we, together with our two joint venture partners in Concord, restructured the investment such that each partner now holds a one-third interest in Concord and in a newly formed entity, CDH CDO LLC, which we refer to as CDH CDO. As part of the restructuring, Concord transferred to CDH CDO for $10,635,000 the equity interest in CDFT, the sole equity owner of CDO-1. The purchase price was funded by a capital contribution from one of our joint venture partners which contribution is entitled to a priority return of 10% per annum. Also during 2010 and the first quarter of 2011, Concord satisfied its obligations under its Credit Suisse repurchase agreement and one if its RBS repurchase agreements. As a result, Concord’s sole remaining obligations are with its KeyBank credit facility and its RBS repurchase agreement with respect to its interest in the Sofitel hotel in New York, New York. Although Concord remains in violation of certain debt covenants under both of these remaining obligations, Concord’s debt is non-recourse to us and Concord’s lenders’ sole recourse with respect to defaults is limited to the value of Concord’s assets.

In 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 remained 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 in 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, we expect the trustee to release 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 distributions to CDFT, which distributions will be used by CDFT to repay the loan of $3,498,000 made by us on December 30, 2010 and the purchase price owed by CDFT to us on account of its purchase of CDO-1 bonds originally purchased by us and which CDFT had an option to acquire. In addition, we expect that the trustee will release the approximately $33,497,000 in principal payments received and held in the CDO-1 reinvestment account which may be used by CDO-1 to acquire new assets for the benefit of CDO-1’s noteholders and CDFT. Furthermore, assuming CDO-1 continues to satisfy its financial tests set forth in its indenture, we expect that CDO-1 will continue to make distributions to CDFT, which in turn will make distributions to its equity holders including us.

Operating Properties

In addition to the loans that were converted to operating properties through foreclosure previously discussed, we made the following acquisitions in 2010:

Operating Property Acquisitions

Crossroads I at Meridian — Englewood, Colorado — On December 22, 2010 we acquired for $8,700,000 an 118,000 square foot, class A office building located at 9800 Mount Pyramid Court, Englewood, Colorado known as Crossroads I at Meridian, which is adjacent to the Crossroads II property we acquired through foreclosure in November 2010.

Land Acquisitions

Kroger Properties — During the first quarter of 2010 we exercised our option to acquire the land underlying six of the properties held in land estates which were scheduled to expire on October 31, 2010 and were leased to the Kroger Company. The acquisition of the six land parcels was consummated on November 1, 2010 at an aggregate purchase price of approximately $4,209,000.

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Plantation Florida — On November 22, 2010 we exercised our option and acquired the land underlying the Plantation, Florida property leased to BellSouth Telecommunication, Inc. for a purchase price of $4,000,000.

Andover, Massachusetts —On December 20, 2010 we exercised our option and acquired the land underlying the Andover, Massachusetts property leased to PAETEC Communications, Inc. for a purchase price of $1,200,000.

REIT Securities

At December 31, 2010 our investments in REIT securities consisted of the following (in thousands):

	Cost		Fair Value
REIT Preferred Shares	$	15,757	$	28,547
REIT Common Shares		3,590		4,485
	$	19,347	$	33,032

Revolving Line of Credit

For information on our Revolving Line of Credit, see ITEM 8 — Financial Statements and Supplementary Data, Note 10.

Employees

As of December 31, 2010, we had no employees. Our affairs are administered by our Advisor, pursuant to the terms of the Advisory Agreement, which includes providing asset management services and coordinating with our shareholder transfer agent and property managers. Under the Advisory Agreement, during 2009 we paid our Advisor a quarterly base management fee equal to 1.5% of (i) the issuance price of our outstanding equity securities plus (ii) 0.25% of any equity contribution by an unaffiliated third party to a venture managed by us. For purposes of the calculation, the 15,754,495 Common Shares outstanding at January 1, 2009 were valued at $11.00 and with respect to the 1,496,000 Series B-1 Preferred Shares outstanding after giving effect to the repurchases of Series B-1 Preferred Shares during the fourth quarter of 2008 and the first quarter of 2009 were valued at $25.00 per Series B-1 Preferred Share. Any additional future conversions, redemptions or repurchases of the Series B-1 Preferred Shares do not reduce the base equity for purposes of the base management fee calculation.

Effective January 1, 2010, the Advisory Agreement was amended so that the determination of the issuance price of Common Shares reverted back to the pre 2009 definition 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. This change will result in an increase, without giving effect to any additional shares issuances, to the annual advisory fee payable to FUR Advisors of approximately $2,100,000 over what would have been paid without the amendment, which increase was phased in with 54% of the increase being paid during 2010. The full impact of the increase will be recognized in 2011.

Pursuant to the terms of the Advisory Agreement, in addition to receiving a base management fee, FUR Advisors is entitled to receive an incentive fee for administering the Trust. FUR Advisors, or its affiliate, is also entitled to receive property and construction management fees at commercially reasonable rates, as determined by our independent Trustees. The incentive fee which is equal to 20% of any amounts available for distribution in excess of a threshold amount (as defined) is only payable at such time, if at all, (i) when holders of our Common Shares receive aggregate distributions above a threshold amount or (ii) upon termination of the Advisory Agreement, if the net value of our assets exceeds the threshold amount based on then current market values and appraisals. That is, the incentive fee is not payable annually but only at such time, if at all, as shareholders have received a return of invested capital (based on initial share issuance price) plus a 7% annual return thereon (the threshold amount) or, if the Advisory Agreement is terminated, if the assets of the Trust exceed the threshold amount. At December 31, 2010 the threshold amount was approximately $468,193,000, which was equivalent to $16.58 per diluted Common Share.

Competition

We have competition with respect to our acquisition of operating properties and our acquisition and origination of loan assets with many other companies, including other REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies and other investors. Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or make different risk assessments, which could allow them to consider a wider variety of investments. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations.

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We will continue to capitalize on the acquisition and investment opportunities that our Advisor brings to us as a result of its acquisition experience as well as our partners in ventures. We derive significant benefit from our present advisor structure, where our Advisor’s experienced management team provides us with resources at substantially less cost than if such persons were directly employed by us. Through its broad experience, our Advisor’s senior management team has established a network of contacts and relationships, including relationships with operators, financing sources, investment bankers, commercial real estate brokers, potential tenants and other key industry participants.

Environmental Regulations

Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment including air and water quality, hazardous or toxic substances and health and safety. These are discussed further under ITEM 1A — Risk Factors.

Segment Data

Business segment data may be found under ITEM 8 — Financial Statements Note 20 and Supplementary Data.

Additional Information

The following materials are available free of charge through our website at www.winthropreit.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC under the Securities Exchange Act of 1934, as amended:

• our Annual Reports on Form 10-K and all amendments thereto;

• our quarterly reports on Form 10-Q and all amendments thereto;

• our current reports on Form 8-K and all amendments thereto;

• other SEC filings;

• organizational documents;

• Audit Committee Charter;

• Compensation Committee Charter;

• Conflicts Committee Charter;

• Nominating and Corporate Governance Committee Charter;

• Code of Business Conduct and Ethics; and

• Corporate Governance Guidelines.

We will provide a copy of the foregoing materials without charge to anyone who makes a written request to our Investor Relations Department, c/o FUR Advisors, LLC, 7 Bulfinch Place, Suite 500, P.O. Box 9507, Boston, Massachusetts 02114.

We also intend to promptly disclose on our website any amendments that we make to, or waivers for our Trustees or executive officers that we grant from, the Code of Business Conduct and Ethics.

New York Stock Exchange Certification

As required by applicable New York Stock Exchange listing rules, on June 14, 2010, following our 2010 Annual Meeting of Shareholders, our Chairman and Chief Executive Officer submitted to the New York Stock Exchange a certification that he was not aware of any violation by us of New York Stock Exchange corporate governance listing standards.

ITEM 1A — RISK FACTORS

We, our assets and the entities in which we invest are subject to a number of risks customary for REITs, property owners, loan originators and holders and equity investors as well as a number of risks involved in our investment, operating, and capital strategy policy that not all REITs may have. Material factors that may adversely affect our business operations and financial conditions are summarized below.

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Risks incidental to real estate investments.

As a REIT our investments are limited to direct ownership and operation of operating properties, loan assets secured, directly or indirectly, by operating assets, and investments in other REITs. Accordingly, an investment in us depends upon our financial performance and the value of our operating properties held from time to time as well as those securing our loan assets, and those held by the REITs in which we invest, which operating properties are subject to the risks normally associated with the ownership, operation and disposal of real estate properties and real estate related assets, including:

• adverse changes in general and local economic conditions which affect the demand for real estate assets;

• competition from other properties;

• increases in interest rates;

• reduced availability of financing;

• the cyclical nature of the real estate industry and possible oversupply of, or reduced demand for, properties in the markets in which our investments are located;

• the attractiveness of our properties to tenants and purchasers;

• how well we manage our properties;

• changes in market rental rates and our ability to rent space on favorable terms;

• the financial condition of our tenants and borrowers including their becoming insolvent and bankrupt;

• the need to periodically renovate, repair and re-lease space and the costs thereof;

• increases in maintenance, insurance and operating costs;

• civil unrest, armed conflict or acts of terrorism against the United States; and

• earthquakes floods and other natural disasters or acts of God that may result in uninsured losses.

In addition, changes to applicable federal, state and local regulations, zoning and tax laws and potential liability under environmental and other laws affect real estate values. Further, throughout the period that we own real property, regardless of whether or not a property is producing any income, we must make significant expenditures, including those for property taxes, maintenance, insurance and related charges and debt service. The risks associated with real estate investments may adversely affect our operating results and financial position, and therefore the funds available for distribution to you as dividends.

We may change our investment and operational policies.

We may change our investment and operating strategy either voluntarily or as result of changing economic conditions, including our policies with respect to investments, acquisitions, growth, operations, indebtedness, capitalization and distributions at any time which could result in our making investments that are different from, and possibly riskier than, our current investments. A change in our investment strategy may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect our financial condition, results of operations, share price and our ability to make distributions.

We may not be able to invest our cash reserves in suitable investments.

As of December 31, 2010, we had approximately $45,257,000 of cash and cash equivalents available for investment. Our ability to increase entity value is dependent upon our ability to grow our asset base by investing these funds, as well as additional funds which we may raise or borrow, in real estate related assets that will ultimately generate more favorable returns.

We may not be able to obtain capital to make investments.

As a REIT, we are dependent primarily on external financing to fund the growth of our business because one of the requirements for a REIT is that it distribute at least 90% of its annual REIT taxable income, subject to certain adjustments, to its shareholders. Accordingly, to the extent we are unable to obtain debt or equity financing it will likely have a material adverse affect on our financial condition and results of operations, our stock price and our ability to pay dividends to our shareholders.

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We are subject to significant competition and we may not compete successfully.

We have significant competition with respect to our acquisition of operating properties and our acquisition and origination of loan assets with many other companies, including other REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies and other investors some of which may have a lower cost of funds and access to funding sources that are not available to us. In addition, many of our competitors have greater resources than we do and for this and other reasons, we may not be able to compete successfully for particular investments.

Investing through ventures presents additional risks.

Our investments in ventures present additional risks such as our having objectives that differ from those of our partners or in the investments we make, becoming involved in disputes concerning operations, or possibly competing with those persons for investments unrelated to our venture. In addition, where we do not control the venture, we rely on the internal controls and financial reporting controls of our partners and, as such, their failure to comply with applicable standards may adversely affect us.

Investing in private companies involves specific risks.

We have held and may acquire additional ownership interests in private companies not subject to the reporting requirements of the SEC. Investments in private businesses involve a higher degree of business and financial risk, which can result in substantial losses and accordingly should be considered speculative. There is generally no publicly available information about these private companies, and we will rely significantly on the due diligence of our Advisor to obtain information in connection with our investment decisions.

Our due diligence may not reveal all of the liabilities associated with a proposed investment and may not reveal other weaknesses.

There can be no assurance that due diligence by our Advisor in connection with a new investment will uncover all relevant facts which could adversely affect the value of the investment and the success of the investment.

We face risks associated with property acquisitions.

We acquire properties and portfolios of properties, including large portfolios that would increase our size and potentially alter our capital structure. Although we enter into these acquisitions with the belief that they will enhance our future financial performance, the success of such transactions is subject to a number of factors, including the risk that:

• we may not be able to obtain financing for acquisitions on favorable terms;

• acquired properties may fail to perform as expected;

• the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;

• acquired properties may be located in new markets where we may have limited knowledge and understanding of the local economy, an absence of business relationships in the area or unfamiliarity with local governmental and permitting procedures; and

• we may not be able to efficiently integrate acquired properties, particularly portfolios of properties, into our organization and manage new properties in a way that allows us to realize cost savings and synergies.

In the future we may acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for partnership interests in our Operating Partnership. This acquisition structure has the effect, among other factors, of reducing the amount of tax depreciation we can deduct over the tax life of the acquired properties, and typically requires that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions on dispositions could limit our ability to sell an asset during a specified time, or on terms, that would be favorable absent such restrictions.

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Acquired properties may subject us to known and unknown liabilities.

Properties that we acquire may be subject to known and unknown liabilities for which we would have no recourse, or only limited recourse, to the former owners of such properties. As a result, if a liability were asserted against us based upon ownership of an acquired property, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flow. Unknown liabilities relating to acquired properties could include:

• liabilities for clean-up of pre-existing disclosed or undisclosed environmental contamination;

• claims by tenants, vendors or other persons arising on account of actions or omissions of the former owners of the properties; and

• liabilities incurred in the ordinary course of business.

Failure to renew expiring leases could adversely affect our financial condition.

We are subject to the risk that, upon expiration, leases may not be renewed, the space may not be relet or the terms of renewal or reletting, including the cost of any required renovations, may be less favorable than the prior or current lease terms. This risk is substantial with respect to our net leased properties as single tenants lease 100% of each property. Thirteen of our properties, containing an aggregate of approximately 2,560,000 square feet of space are net leased to six different tenants. Leases accounting for approximately 5% of the aggregate annualized base rents from our operating properties for 2010, representing approximately 5% of the net rentable square feet at the properties, are scheduled to expire in 2011. The lease at our Churchill, Pennsylvania property which accounted for approximately $3,100,000 in annual rental revenue in 2010, expired December 31, 2010. Other leases grant tenants early termination rights upon payment of a termination penalty. Lease expirations will require us to locate new tenants and negotiate replacement leases with them. The costs for tenant improvements, tenant concessions and leasing commissions with respect to new leases are traditionally greater than costs relating to renewal leases. If we are unable to promptly relet or renew leases for all or a substantial portion of the space subject to expiring leases, or if the rental rates upon such renewal or reletting are significantly lower than expected, our revenue and net income could be adversely affected.

We are subject to risks associated with the financial condition of our and our borrower’s tenants.

Our tenants or tenants at properties securing our loan assets may experience a downturn in their business resulting in their inability to make rental payments when due. In addition, a tenant may seek the protection of bankruptcy, insolvency or similar laws, which could result in the rejection and termination of such tenant’s lease and cause a reduction in our cash flow. If this were to occur at a net lease property, the entire property would become vacant.

We cannot evict a tenant solely because of its filing for bankruptcy. A bankruptcy court, however, may authorize a tenant to reject and terminate its lease. In such a case, our claim against the tenant for past due rent and unpaid future rent would be subject to a statutory cap that might be substantially less than the remaining rent owed under the lease. In any event, it is unlikely that a bankrupt tenant will pay the entire amount it owes us under a lease. The loss of rental payments from tenants could adversely affect our financial condition and results of operations.

Similarly, if a tenant at a property securing a loan asset fails to meet its rental obligations, the borrower may have insufficient funds to satisfy the debt service resulting in a default on our loan asset. Additionally, the loss of a tenant at a property securing a loan asset could negatively impact the value of the property and, therefore, our collateral.

The loss of a major tenant could adversely affect our financial condition.

We are and expect that we will continue to be subject to a degree of tenant concentration at certain of our operating properties and the properties securing our loan assets. As indicated above, we are subject to risks associated with the financial condition of our tenants and tenants at properties securing our loan assets. In the event that a tenant occupying a significant portion of one or more of our properties or whose rental income represents a significant portion of the rental revenue at such property or properties were to experience financial weakness, default on its lease, elect not to renew its lease or file bankruptcy it would negatively impact our financial condition and results of operations. Similarly, if a tenant occupying a significant portion of one or more of the properties securing our loan assets or whose rental income represents a significant portion of the rental revenue at such property or properties experiences financial weakness defaults on its lease, elects not to renew its lease or files for bankruptcy, it would negatively impact our financial condition and results of operations.

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We may experience increased operating costs, which might reduce our profitability.

Our properties are subject to increases in operating expenses such as for cleaning, electricity, heating, ventilation and air conditioning, administrative costs and other costs associated with security, landscaping and repairs and maintenance of our properties. In general, under our leases with tenants, we pass through all or a portion of these costs to them. There can be no assurance that tenants will actually bear the full burden of these higher costs, or that such increased costs will not lead them, or other prospective tenants, to seek office space elsewhere. If operating expenses increase, the availability of other comparable office space in the geographic markets of our properties might limit our ability to increase rents; if operating expenses increase without a corresponding increase in revenues, our profitability could diminish and limit our ability to make distributions to shareholders.

We leverage our portfolio, which may adversely affect our financial condition and results of operations.

We seek to leverage our portfolio through borrowings. Our return on investments and cash available for distribution to holders of our Series B-1 and Series C Preferred Shares and Common Shares may be reduced to the extent that changes in market conditions make new borrowings or refinancing of existing debt difficult or even impossible or cause the cost of our financings to increase relative to the income that can be derived from the assets. Our debt service payments reduce the cash available for distributions to holders of Series B-1 and Series C Preferred Shares and Common Shares. We may not be able to meet our debt service obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to foreclosure or forced sale to satisfy our debt obligations. A decrease in the value of the assets may lead to a requirement that we repay certain existing or future credit facilities. We may not have the funds available, or the ability to obtain replacement financing, to satisfy such repayments.

Interest rate fluctuations may reduce our investment return.

Certain of our loan obligations and loan assets have floating interest rates. In such cases, an increase in interest rates would increase our loan obligations while a decrease in interest rates would decrease the interest received on our loan assets. Where possible we seek to mitigate these risks by acquiring interest rate cap agreements, rate collars and other similar protections. To the extent we have not mitigated these risks or our actions are ineffective, a fluctuation in interest rates could negatively impact our cash flow due to an increase in loan obligations or a decrease in interest received on our loan assets.

We engage in hedging transactions that may limit gains or result in losses.

We have and may continue to use hedging instruments in our risk management strategy to limit the effects of changes in interest rates on our operations. A hedge may not be effective in eliminating all of the risks inherent in any particular position. Further, we have and could in the future recognize losses on a hedge position which adversely effects our financial condition and results of operations. In addition, we run the risk of default by a counterparty to a hedging arrangement.

We may be unable to refinance our existing debt or preferred share financings or obtain favorable refinancing terms.

We are subject to the normal risks associated with debt and preferred share financings, including the risk that our cash flow will be insufficient to meet required payments of principal and interest on debt and distributions and redemption payments to holders of preferred shares and the risk that indebtedness on our properties, or unsecured indebtedness, will not be able to be renewed, repaid or refinanced when due, or that the terms of any renewal or refinancing will not be as favorable as the terms of such indebtedness. These risks are exacerbated by the current tightened lending requirements for real estate related assets and in some cases the inability to refinance real estate indebtedness. If we were unable to refinance indebtedness or preferred share financings on acceptable terms, or at all, we might be forced to dispose of one or more of our investments on disadvantageous terms, which might result in losses to us, which could have a material adverse affect on us and our ability to pay distributions to our holders of Preferred Shares and Common Shares. Furthermore, if a property is mortgaged or a loan pledged to secure payment of indebtedness and we are unable to meet the debt payments, the lender could foreclose upon the property or the loan, appoint a receiver or obtain an assignment of rents and leases or pursue other remedies, all with a consequent loss of revenues and asset value to us. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements.

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The loans we invest in are subject to delinquency and loss.

Our loan assets are directly or indirectly secured by income producing property. The ability of a borrower to make payments on the loan underlying these securities is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower since the underlying loans are generally non-recourse in nature. These loans are subject to risks of delinquency and foreclosure as well as risk associated with the capital markets. If a borrower were to default on a loan, it is possible that we would not recover the full value of the loan.

We may be unable to foreclose on the collateral securing our loan assets on a timely basis.

In certain states foreclosing on a property can be a lengthy and costly process. In addition, a borrower can file for bankruptcy or raise defenses that could delay our ability to realize on our collateral on a timely basis. In such instances, the increased costs and time required to realize on our collateral would likely result in a reduced return on the investment.

The subordinate loan assets we invest are subject to risks relating to the structure and terms of the transactions, and there may not be sufficient funds or assets to satisfy our subordinate notes, which may result in losses to us.

We invest in loan assets that are subordinate in payment and collateral to more senior loans. If a borrower defaults or declares bankruptcy, after the more senior obligations are satisfied, there may not be sufficient funds or assets remaining to satisfy our subordinate notes. Because each transaction is privately negotiated, subordinate loan assets can vary in their structural characteristics and lender rights, including our rights to control the default or bankruptcy process. The subordinate loan assets that we invest in may not give us the right to demand foreclosure as a subordinate debtholder. Furthermore, the presence of intercreditor agreements, co-lender agreements and participation agreements may limit our ability to amend the loan documents, assign the loans, accept prepayments, exercise remedies and control decisions made in bankruptcy proceedings relating to borrowers. Bankruptcy and borrower litigation can significantly increase the time needed for us to acquire possession of underlying collateral in the event of a default, during which time the collateral may decline in value. In addition, there are significant costs and delays associated with the foreclosure process.

The widening of credit spreads could have a negative impact on the value of our loan asset and REIT debt securities.

The fair value of our loan assets is dependent upon the yield demanded on these assets by the market based on the underlying credit as well as general economic conditions. Although many of our directly held loan assets were purchased at significant discounts, a further deterioration of the real estate markets or a large supply of these loan assets available for sale combined with reduced demand will generally cause the market to require a higher yield on these loan assets, resulting in a higher, or “wider,” spread over the benchmark rate of such loan assets. Under these conditions, the value of the loan assets in our portfolio would decline.

Our investments in REIT debt securities are also subject to changes in credit spreads as their value is dependent upon the yield demanded on these securities by the market based on the underlying credit. Excessive supply of these securities combined with reduced demand will generally cause the market to require a higher yield on these real estate securities, resulting in the use of a higher, or “wider,” spread over the benchmark rate to value such securities. Under such conditions, the value of our REIT debt securities portfolio would tend to decline. Such changes in the market value of our portfolio may adversely affect our financial condition and results of operations.

The deterioration of the credit markets has had an adverse impact on the ability of borrowers to obtain replacement financing.

The deterioration of credit markets has made it extremely difficult for borrowers to obtain mortgage financing. The inability of borrowers to obtain replacement financing has led and will likely continue to lead to more loan defaults thereby resulting in expensive and time consuming foreclosure actions and/or negotiated extensions to existing loans beyond their current expirations on terms which may not be as favorable to us as the existing loans.

A prolonged economic slowdown, a lengthy or severe recession or continued instability in the credit markets could harm our operations and viability.

A prolonged economic slowdown, a lengthy or severe recession or the continued instability in the credit market has and will affect our operations and viability in a number of ways including:

• Depressing prices for our investments, operating properties and loan assets;

• Decreasing interest income received or increases in interest expenses paid;

• Reducing the number of potential purchasers for our assets;

• Increasing risk of default on loan assets;

• Limiting the ability to obtain new or replacement financing; and

• Limiting the ability to sell additional debt or equity securities.

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Many of our investments are illiquid, and we may not be able to adjust our portfolio in response to changes in economic and other conditions, which may result in losses to us.

Many of our investments are relatively illiquid and, therefore, our ability to sell or purchase assets in response to a change in economic or other conditions may be limited. The requirements of the Code that we hold assets for a set period of time or risk losing status as a REIT also may limit our ability to sell investments. These considerations could make it difficult for us to dispose of assets, even if a disposition were in the best interest of our shareholders. As a result, our ability to adjust our portfolio in response to changes in economic and other conditions may be relatively limited, which may result in losses and lost opportunities.

Our investments in REIT securities are subject to specific risks relating to the particular REIT issuer of the securities and to the general risks of investing in REITs.

Our investments in REIT securities involve special risks. These risks include many, if not all, of the foregoing risks which apply to an investment in us, including: (i) risks generally incident to interests in real estate assets; (ii) risks associated with the failure to maintain REIT qualification; (iii) risks that may be presented by the type and use of a particular property; and (iv) risks that the issuer of the security may reduce or eliminate expected dividend payments.

Some of our potential losses may not be covered by insurance.

We use our discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to maintaining appropriate insurance coverage on our investments at a reasonable cost and on suitable terms. This may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full current market value or current replacement cost of the lost investment and also may result in certain losses being totally uninsured. Inflation, changes in building codes, zoning or other land use ordinances, environmental considerations, lender imposed restrictions or other factors might not make it feasible to use insurance proceeds to replace the building after such building has been damaged or destroyed. Under such circumstances, the insurance proceeds, if any, received by us might not be adequate to restore our economic position with respect to such property. With respect to our net leased properties, under the lease agreements for such properties, the tenant is required to adequately insure the property, but should a loss occur their failure or inability to have adequate coverage might adversely affect our economic position with respect to such property.

We have significant distribution obligations to holders of our Series B-1 and Series C Preferred Shares.

The provisions of our Series B-1 and Series C Preferred Shares currently require us to make quarterly distributions presently aggregating approximately $405,000 or $1,619,000 annually before any distributions may be made on our Common Shares.

Covenants in our debt instruments could adversely affect our financial condition and our ability to make future investments.

Debt instruments under which we are an obligor contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further encumber, directly or indirectly, the applicable property. Our credit facility contains, and other loans that we may obtain in the future may contain, customary restrictions, requirements and other limitations on our ability to incur indebtedness. These restrictions can include, among other things, a limitation on our ability to incur debt based upon the level of our ratio of total debt to total assets, our ratio of secured debt to total assets, our ratio of EBITDA to interest expense and fixed charges, and a requirement for us to maintain a certain level of unencumbered assets to unsecured debt. Our ability to borrow under our credit facility with KeyBank National Association is subject to compliance with certain other covenants including the absence of factors both within and outside of our control. If we fail to comply with our covenants, it would cause a default under the applicable debt instrument, and we may then be required to repay such debt with funds from other sources which may not be available to us, or be available only on unattractive terms. Further, a default under a debt instrument could limit our ability to obtain additional equity or debt financing in the future, either of which would adversely affect our financial condition and results of operations.

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Covenants in our Preferred Shares limit our ability to issue additional preferred shares.

Our Series B-1 Preferred Shares restrict our ability to issue shares senior or pari passu in priority the Series B-1 Preferred Shares without the consent of two-thirds in interest of our Series B-1 Preferred Shares. Similarly, our Series C Preferred Shares restrict our ability to issue shares senior or, subject to limited issuance rights, pari passu in priority the Series C Preferred Shares without the consent of two-thirds in interest of our Series C Preferred Shares. Accordingly, our ability to raise capital through the issuance of additional preferred shares is significantly restricted until the Series B-1 and Series C Preferred Shares are redeemed.

Future issuances and sales of equity or debt interests may affect the market price of our Common Shares and the amount of dividends payable to our shareholders.

The actual issuance of additional common or preferred shares or the sale of debt securities by us may decrease the market price of our Common Shares. In paying dividends on our Common Shares we endeavor to have our dividends track recurring cash flow from operations. Accordingly, as we issue additional Common Shares, the per share dividend will likely decrease until such time as we deploy the proceeds from such issuance of Common Shares in investments which increase our recurring cash flow.

Our focus on total return investing may impact our ability to maintain our dividend rate.

Our focus on a total return value approach to investing may result in our inability to maintain the current dividend rate as we do not necessarily seek assets that provide recurring or potentially recurring cash flow but seek to invest in assets that we believe will provide us with a superior risk-adjusted total return which encompasses both current return and capital appreciation. Accordingly, the true value of an investment may not be realized until such investment is liquidated.

If we issue preferred equity or debt we may be exposed to additional restrictive covenants and limitations on our operating flexibility, which could adversely affect our ability to pay dividends.

If we decide to issue preferred equity or debt in the future, it is likely that they will be governed by an indenture or other instrument containing covenants that may restrict our operating flexibility which could have an adverse effect on the market price of our Common Shares or our ability to pay dividends.

We may fail to remain qualified as a REIT, which would reduce the cash available for distribution to our shareholders.

Qualification as a REIT for federal income tax purposes is governed by highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations. Our qualification as a REIT also depends on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions might change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualification as a REIT. Although we currently intend to operate in a manner designed to allow us to continue to qualify as a REIT, future economic, market, legal, tax or other considerations might cause us to elect to revoke the REIT election. In that event, we and our shareholders would no longer be entitled to the federal income tax benefits applicable to a REIT.

If, with respect to any taxable year, we were to fail to maintain our qualification as a REIT or elect to revoke our REIT election, we would not be able to deduct distributions to our shareholders in computing our taxable income and would have to pay federal corporate income tax (including any applicable alternative minimum tax) on our taxable income. If we had to pay federal income tax, the amount of money available to distribute to our shareholders would be reduced for the year or years involved. In addition, we would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost and thus our cash available for distribution to our shareholders would be reduced in each of those years, unless we were entitled to relief under relevant statutory or regulatory provisions.

In order to maintain our status as a REIT, we may be forced to borrow funds or sell assets during unfavorable market conditions.

As a REIT, we must distribute at least 90% of our annual REIT taxable income, subject to certain adjustments, to our shareholders. To the extent that we satisfy the REIT distribution requirement but distribute less than 100% of our taxable income, we will be subject to federal and, where applicable, state corporate income tax on our undistributed taxable income. In addition, if we fail to distribute at least 90% of our annual REIT taxable income, subject to certain adjustments, we will be subject to a 4% nondeductible excise tax.

19

From time to time, we may have taxable income greater than our cash available for distribution to our shareholders (for example, due to substantial non-deductible cash outlays, such as capital expenditures or principal payments on debt). If we did not have other sources of funds available in these situations, we could be required to borrow funds, sell investments at disadvantageous prices or find alternative sources of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid income and excise taxes in a particular year. Additionally, we could elect to pay a portion of our required dividend in Common Shares. Each of these alternatives could increase our operating costs and diminish our rate of growth.

Factors that may cause us to lose our New York Stock Exchange listing.

We might lose our listing on the New York Stock Exchange depending on a number of factors, including failure to qualify as a REIT, or our not meeting the New York Stock Exchange’s requirements, including those relating to the number of shareholders, the price of our Common Shares and the amount and composition of our assets.

Ownership limitations in our bylaws may adversely affect the market price of our Common Shares.

Our bylaws contain an ownership limitation that is designed to prohibit any transfer of Common Shares or Preferred Shares that would result in our being “closely-held” within the meaning of Section 856(h) of the Code. This ownership limitation, which may be waived by our Board of Trustees, generally prohibits any single shareholder, or any group of affiliated shareholders, from beneficially or constructively owning more than 9.8% of our outstanding Common Shares. Our Board of Trustees has waived this ownership limitation in the past where there is believed to be a benefit derived by the Company from granting such waiver and the party obtaining the waiver provides assurances that the issuance of the waiver will not result in the Company becoming, or likely becoming, “closely held.” Unless the Board of Trustees waives the restrictions or approves a bylaw amendment, Common Shares owned by a person or group of persons in excess of 9.8% of our outstanding Common Shares are not entitled to any voting rights, are not considered outstanding for quorum or voting purposes, and are not entitled to dividends, interest or any other distributions with respect to the Common Shares. The ownership limit may have the effect of inhibiting or impeding a change of control or a tender offer for our Common Shares.

We must manage our investments in a manner that allows us to rely on an exemption from registration under The Investment Company Act in order to avoid the consequences of regulation under that Act.

We intend to operate our business so that we are exempt from registration as an investment company under the Investment Company Act of 1940, as amended. Therefore, the assets that we may invest in, or acquire, are limited by the provisions of the Investment Company Act and the rules and regulations promulgated thereunder. If we are required to make investments in order to be exempt from registration, such investments may not represent an optimum use of our capital when compared to other available investments.

Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unanticipated expenditures that adversely affect our financial condition and results of operations.

All of our properties are required to comply with the Americans with Disabilities Act, which we refer to as the ADA. The ADA has separate compliance requirements for “public accommodations” and “commercial facilities,” but generally requires that buildings be made accessible to people with disabilities. Although we believe that our properties are in compliance with the ADA, it is possible that we may have to incur additional expenditures which, if substantial, could adversely affect our financial condition and results of operations.

In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by local, state and federal governmental agencies and bodies and become applicable to our properties. We may be required to make substantial capital expenditures to comply with those requirements and these expenditures could have an adverse affect on our financial condition and results of operations.

20

We may incur costs to comply with environmental laws.

The obligation to pay for the cost of complying with existing environmental laws, ordinances and regulations, as well as the cost of complying with future legislation, may increase our operating costs. Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on or under the property. Environmental laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances and whether or not such substances originated from the property. In addition, the presence of hazardous or toxic substances, or the failure to remediate such property properly, may adversely affect our ability to borrow by using such property as collateral. We maintain insurance related to potential environmental issues on our properties which are not net leased which may not be adequate to cover all possible contingencies.

Ability of our Advisor and other third parties directly affects our financial condition.

Other than for severe economic conditions or natural forces which may be unanticipated or uncontrollable, the ultimate value of our assets and the results of our operations will depend on the ability of our Advisor and other third parties we retain to operate and manage our assets in a manner sufficient to maintain or increase revenues and control our operating and other expenses in order to generate sufficient cash flows to pay amounts due on our indebtedness and to pay dividends to our shareholders.

We are dependent on our Advisor and the loss of our Advisor’s key personnel could harm our operations and adversely affect the value of our shares.

We have no paid employees. Our officers are employees of our Advisor. We have no separate facilities and are completely reliant on our Advisor who has significant discretion as to the implementation of our investment and operating strategies. We are subject to the risk that our Advisor will terminate its Advisory Agreement and that no suitable replacement will be found. Furthermore, we are dependent on the efforts, diligence, skill, network of business contacts and close supervision of all aspects of our business by our Advisor and, in particular, Michael Ashner, Chairman of our Board of Trustees and our chief executive officer, Carolyn Tiffany, our president, as well as our other executive officers. While we believe that we could find replacements for these key personnel, the loss of their services could have a negative impact on our operations and the market price of our shares.

The incentive fee payable to our Advisor may be substantial.

Pursuant to the terms of the Advisory Agreement, our Advisor is entitled to receive an incentive fee equal to 20% of any amounts available for distribution in excess of a threshold amount. The incentive fee is only payable at such time, if at all, (i) when holders of our Common Shares receive aggregate distributions above a threshold amount or (ii) upon termination of the Advisory Agreement, if the value of our assets exceed the threshold amount based on then current market values and appraisals. That is, the incentive fee is not payable annually but only at such time, if at all, as shareholders have received the threshold amount or, if the Advisory Agreement is terminated, the assets of the Trust exceed the threshold amount. At December 31, 2010, the threshold amount was approximately $468,193,000, which was equivalent to $16.58 for each of our Common Shares on a fully diluted basis. At such time as shareholders’ equity exceeds the threshold amount, we will record a liability in our financial statements equal to approximately 20% of the difference between shareholders’ equity and the threshold amount in accordance with generally accepted accounting principles.

Termination of the Advisory Agreement may be costly or not in our best interest.

Termination of the Advisory Agreement either by us or our Advisor may be costly. Upon termination of the Advisory Agreement, our Advisor would be entitled to a termination fee equal to the incentive fee based on an appraised valuation of our assets assuming we were then liquidated. The amount payable on termination of the Advisory Agreement could be substantial which may have a negative effect on the price of our Common Shares. Further, affiliates of our Advisor hold approximately 12.3% of our outstanding Common Shares and serve as our executive officers. Accordingly, if we were inclined to terminate the Advisory Agreement, the ownership position of our Advisor in our Common Shares could result in other adverse effects to us and the price of our Common Shares.

ITEM 1B — UNRESOLVED STAFF COMMENTS

None.

21

ITEM 2 — PROPERTIES

The following tables set forth certain information relating to operating properties in which we have an ownership interest. All information presented is as of December 31, 2010, except as noted. Dollars are stated in thousands.

Table of Operating Office, Retail and Industrial Properties

CONSOLIDATED PROPERTIES

												Major		($000’s)			($000’s)			Debt
Description and	Year		Trust’s			Rentable		(**)			Major Tenants	Tenants’		Cost Less		Ownership	Debt			Maturity
Location	Acquired		Ownership			Square Feet		% Leased			(Lease /Options Exp)	Sq. Feet.		Depreciation		of Land	Balance			& Int Rate
Retail
Atlanta, GA											The Kroger Co.
		2004		100	%		61,000		100	%	(2016/2026)		61,000	$	3,928	Ground Lease		(1	)		(1	)
Denton, TX											Fitness Evolution
		2004		100	%		46,000		63	%	(2012)		29,000		2,250	Fee		(1	)		(1	)
Greensboro, NC											The Kroger Co.
		2004		100	%		47,000		100	%	(2017/2037)		47,000		3,219	Ground Lease		(1	)		(1	)
Lousiville, KY											The Kroger Co.
		2004		100	%		47,000		100	%	(2015/2040)		47,000		2,681	Fee		(1	)		(1	)
Memphis, TN											The Kroger Co.
		2004		100	%		47,000		100	%	(2015/2040)		47,000		1,281	Fee		(1	)		(1	)
Seabrook TX											The Kroger Co.
		2004		100	%		53,000		100	%	(2015/2040)		53,000		1,798	Fee		(1	)		(1	)
St. Louis, MO (2)		2004		100	%		46,000		0	%	Vacant		46,000		1,487	Fee		(1	)		(1	)
Subtotal Retail							347,000								16,644			19,002	(1)

(Continued on next page)

22

CONSOLIDATED PROPERTIES (Continued)

												Major		($000’s)			($000’s)
Description and	Year		Trust’s			Rentable		(**)			Major Tenants	Tenants’		Cost Less		Ownership	Debt			Debt Maturity
Location	Acquired		Ownership			Square Feet		% Leased			(Lease /Options Exp)	Sq. Feet.		Depreciation		of Land	Balance			& Int Rate
Office
Amherst, NY (3)											Ingram Micro Systems										10/2013
		2005		100	%		200,000		100	%	(2013/2023)		200,000	$	17,083	Fee	$	16,117			5.65	%
Andover, MA											PAETEC Comm.										03/2011
		2005		100	%		93,000		100	%	(2022/2037)		93,000		7,448	Fee		6,135			6.60	%
Chicago, IL											The Gettys Group										03/2016
(One East Erie / Marc Realty)		2005		80	%		126,000		87	%	(2012/2016)		13,000		21,794	Fee		20,828			5.75	%
											River North Surgery
											(2015/ n/a)		15,000
Chicago, IL											Bally Total Fitness										04/2012
(River City / Marc Realty )		2007		60	%		253,000		72	%	(2013/2021)		55,000		14,854	Fee		9,100			6.00	%
											MCI d/b/a Verizon
											(2019/2023)		37,000
Houston, TX											Spectra Energy										04/2016
		2004		8	%		614,000		100	%	(2018/2028)		614,000		60,042	Fee		60,351			6.34	%
Indianapolis, IN											No Tenants										04/2015
(Circle Tower)		1974		100	%		111,000		84	%	Over 10%		—		4,732	Fee		4,245			5.82	%
Lisle, IL											United Healthcare										06/2016
		2006		100	%		169,000		52	%	(2014/ n/a)		41,000		18,709	Fee		16,972			6.26	%
Lisle, IL											T Systems, Inc.										06/2016
		2006		100	%		67,000		85	%	(2011)		35,000		8,166	Fee		6,932			6.26	%
											ABM Janitorial
											(2012/2014)		11,000
											Zenith Insurance
											(2011)		10,000
Lisle, IL											Ryerson										03/2017
(Marc Realty)		2006		60	%		54,000		100	%	(2018/2028)		54,000		3,674	Fee		5,600			5.55	%
Orlando, FL											Siemens Real Estate, Inc.										07/2017
		2004		100	%		256,000		100	%	(2017/2042)		256,000		14,643	Ground Lease		38,657			6.40	%
Plantation, FL											BellSouth
		2004		100	%		133,000		100	%	(2020/2035)		133,000		11,567	Fee		(1	)		(1	)
South Burlington, VT											Fairpoint Comm.										03/2011
		2005		100	%		56,000		100	%	(2014/2029)		56,000		3,021	Ground Lease		2,629			6.60	%
Phoenix, AZ (Deer Valley Professional Center)		2010		96.5	%		82,000		61	%	United Healthcare (2017/2027)		42,000		8,126	Fee		—			n/a
Englewood, CO											RGN-Denver LLC
(Crossroads I)		2010		100.0	%		118,000		55	%	(2015/2025)		17,000		7,427	Fee		—			n/a
Englewood, CO											Catholic Health Initiatives
(Crossroads II)		2010		100.0	%		118,000		58	%	(2011)		30,000		7,938	Fee		—			n/a
Subtotal — Office							2,450,000								209,224			187,566

(Continued on next page)

23

CONSOLIDATED PROPERTIES (Continued)

						Units /						Major		($000’s)			($000’s)
Description and	Year		Trust’s			Rentable		(**)			Major Tenants	Tenants’		Cost Less		Ownership	Debt			Debt Maturity
Location	Acquired		Ownership			Square Feet		% Leased			(Lease /Options Exp)	Sq. Feet.		Depreciation		of Land	Balance			& Int Rate
Other
Residential
Meriden, CT																					02/2012
(Newbury Apts)		2010		100	%	180 Units			92	%	n/a		n/a		25,115	Fee	$	23,875			5.83	%
Warehouse
Jacksonville, FL											Football Fanatics
		2004		100	%		587,000		100	%	(2015/2024)		558,000		10,818	Fee		(1	)		(1	)
Mixed Use
Churchill, PA (4)		2004		100	%		1,008,000		100	%	Viacom, Inc. (2010)		1,008,000		10,466	Ground Lease		(1	)		(1	)
Subtotal — Other							1,595,000								46,399			23,875
Total Consolidated Properties							4,392,000							$	272,267		$	230,443

(**)	Occupancy rates include all signed leases, including space undergoing tenant improvements.
(1)	Our retail properties and our properties located in Churchill, Pennsylvania, Plantation, Florida, and Jacksonville, Florida collateralized $19,002 of mortgage debt at an interest rate of LIBOR + 1.75% which matures in June 2011.
(2)	On February 8, 2011 we entered into a contract to sell this property subject to the buyer’s due to diligence. We anticipate that the sale of this property will be consumated during the second quarter of 2011.
(3)	The Amherst, New York office property represents two separate buildings. The ground underlying the properties is leased to us by the local development authority pursuant to a ground lease which requires no payment. Effective October 31, 2013, legal title to the ground will vest with us.
(4)	The lease term with respect to our property located in Churchill, Pennsylvania expired on December 31, 2010. We currently are in litigation with the former tenant, Viacom, related to the condition of the property.

24

EQUITY INVESTMENTS

														($000’s)
												Major		Equity			($000’s)
Description and	Year		Trust’s			Rentable		(**)			Major Tenants	Tenants’		Investment		Ownership	Debt			Debt Maturity
Location	Acquired		Ownership			Square Feet		% Leased			(Lease /Options Exp)	Sq. Feet.		Balance		of Land	Balance (1)			& Int Rate
Marc Realty Portfolio — Equity Investments
8 South Michigan,																					08/2011
Chicago, IL		2005		50	%		174,000		94	%	No tenants over 10%		—	$	7,087	Ground Lease	$	3,886			6.87	%
11 East Adams,											IL School of Health										08/2011
Chicago, IL		2005		49	%		161,000		78	%	(2015/2020)		28,700		3,223	Fee		9,999		Libor + 2		%
29 East Madison,											Computer Systems Institute										05/2013
Chicago, IL		2005		50	%		235,000		90	%	(2020/2030)		25,000		7,720	Fee		11,130			5.20	%
30 North Michigan,																					08/2014
Chicago, IL		2005		50	%		221,000		91	%	No tenants over 10%		—		12,080	Fee		13,097			5.99	%
223 West Jackson, Chicago, IL																					06/2012
(Brooks Building)		2005		50	%		168,000		59	%	No tenants over 10%		—		7,452	Fee		7,794			6.92	%
4415 West Harrison, Hillside, IL											North American Medical Mgmt										12/2015
(High Point)		2005		50	%		192,000		67	%	(2015/2020)		20,400		6,275	Fee		4,610			5.62	%
2000-60 Algonquin, Shaumburg, IL																					02/2013
(Salt Creek)		2005		50	%		101,000		70	%	No tenants over 10%		—		2,344	Fee		(2	)	Libor + 2.75		%
1701 E. Woodfield,																					09/2015
Shaumburg, IL		2005		50	%		175,000		87	%	No tenants over 10%		—		4,221	Fee		5,755		Libor + 3		% (3)
2720 River Rd,																					10/2012
Des Plains, IL		2005		50	%		108,000		92	%	No tenants over 10%		—		4,123	Fee		2,581			6.095	%
3701 Algonquin,											ISACA										02/2013
Rolling Meadows IL		2005		50	%		193,000		82	%	(2018/2024)		29,600		2,931	Fee		10,373		Libor + 2.75		%
											Relational Funding
											(2013/ n/a)		27,400
2205-55 Enterprise,											Consumer Portfolio										02/2013
Westchester, IL		2005		50	%		130,000		94	%	(2014/2019)		18,900		3,018	Fee		(2	)	Libor + 2.75		%
900-910 Skokie, Northbrook, IL											MIT Financial Group										02/2011	(4)
(Ridgebrook)		2005		50	%		119,000		78	%	(2016/ n/a)		12,600		1,676	Fee		5,405		Libor + 2		%
Subtotal — Marc Realty Portfolio							1,977,000								62,150			86,236

(Continued on next page)

25

EQUITY INVESTMENTS (Continued)

														($000’s)
												Major		Equity			($000’s)
Description and	Year		Trust’s			Rentable		(**)			Major Tenants	Tenants’		Investment		Ownership	Debt		Debt Maturity
Location	Acquired		Ownership			Square Feet		% Leased			(Lease /Options Exp)	Sq. Feet.		Balance		of Land	Balance (1)		& Int Rate
Sealy Venture Properties — Equity Investments
Atlanta, GA (5)											Original Mattress									01/2012
(Northwest Atlanta)		2006		60	%		472,000		75	%	(2020/2025)		57,000	$	2,479	Fee	$	28,750		5.7	%
Atlanta, GA (6)											Alere Health									11/2016
(Newmarket)		2008		68	%		470,000		66	%	(2011/ n/a)		76,000		6,647	Fee		37,000		6.12	%
Nashville, TN (7)																				05/2012
(Airpark)		2007		50	%		1,155,000		86	%	No tenants over 10%		—		2,778	Fee		74,000		5.77	%
Subtotal — Sealy Venture Properties							2,097,000							$	11,904		$	139,750
Total Equity Investments							4,074,000

(**)	Occupancy rates include all signed leases including space undergoing tenant improvements
(1)	Debt balance shown represents 100% of the debt encumbering the properties.
(2)	Both the 2000-60 Algonquin and 2205-55 Enterprise Road Marc Realty properties are cross collateralized by a mortgage of $11,606 which is included in total debt balance.
(3)	An interest rate swap agreement with a notional amount of $5,755 effectively converts the interest rate to a fixed rate of 4.78%.
(4)	In February 2011, the maturity date was extended to May 2011 and the venture is currently negotiating with the lender to further extend the maturity date.
(5)	Equity investment in Sealy Northwest Atlanta consists of 12 flex/office properties.
(6)	Equity investment in Sealy Newmarket consists of six flex/office campus style properties
(7)	Equity investment in Sealy Airpark consists of 13 light distribution and service center properties.

26

PREFERRED EQUITY INVESTMENT

($000’s)

Preferred

Equity

($000’s)

Description and

Year

Trust’s

Rentable

(**)

Major Tenants

Investment

Ownership

Debt

Debt Maturity

Location

Acquired

Ownership

Square Feet

% Leased

(Lease /Options Exp)

Balance

of Land

Balance (1)

& Int Rate

Office

180 North Michigan

Chicago, IL

None over

03/2011

(2)

(Marc Realty)

2008

70

%

229,000

89

%

10%

$

3,923

Fee

18,080

Libor+1.5

%(3)

(1)	Debt balance shown represents 100% of the debt encumbering the properties.
(2)	In February 2011, the venture elected to exercise the extension option, extending maturity to March 27, 2013.
(3)	An interest rate swap agreement with a notional amount of $17,614 effectively converts the interest rate to a fixed rate of 4.55%.

GROUND LEASES

On certain of our properties we own the improvements and lease the land underlying the improvements pursuant to ground leases.

The following table sets forth the terms of the ground leases:

	Current Term		Lease Term Rents
Property Location	Expiration	Renewal Terms	Per Annum
Atlanta, GA	9/30/2011	Three 5 year	$30,000 plus 1/2 of 1% of sales greater than $27,805,800 (1)
Churchill, PA	12/31/2015	Five 5 year	$300,000 through current term and then fair market value
Greensboro, NC	12/31/2012	Three 5-year and fifteen 1-year	$71,178 increased by approximately $12,000 for each successive renewal period plus 1% of sales over $36,213,850 (1)
Lafayette, LA (2)	4/30/2013	Seven 5-year	$185,064 increased by 5% for each successive renewal term
Orlando, FL	12/31/2017	Five 5-year	$1 though the current term and then fair market value (1)
South Burlington, VT	1/2/2015	Three 5-year and one 10-year	None (1)

(1)	The lease requires the tenant to perform all covenants under the ground lease including the payment of ground rent.
(2)	We have determined that the fair market value of the property is less than the required ground rent payments and have stopped making any payments on the ground lease. We have received notice that as a result of the failure to make such payments the ground lease is in default.

27

Operating Properties — Multi-Tenant

The following tables set forth certain information concerning lease expirations (assuming no renewals and excluding month to month leases) as of December 31, 2010 for our consolidated multi-tenant properties:

One East Erie Property — Chicago, Illinois

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		4		12,000	$	313,000		11	%
2012		1		12,000		254,000		9	%
2013		4		11,000		387,000		14	%
2014		3		19,000		495,000		17	%
2015 and beyond		10		49,000		1,417,000		49	%

River City Property — Chicago, Illinois

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		2		2,000	$	32,000		1	%
2012		2		13,000		314,000		10	%
2013		3		60,000		667,000		21	%
2014		1		6,000		121,000		4	%
2015 and beyond		5		90,000		2,021,000		64	%

Circle Tower — Indianapolis, Indiana

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		17		18,000	$	$225,000		17	%
2012		9		10,000		158,000		12	%
2013		7		21,000		298,000		22	%
2014		2		5,000		61,000		4	%
2015 and beyond		11		37,000		618,000		45	%

Corporetum Properties — Lisle, Illinois

550/650 Corporetum

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		2		5,000	$	56,000		5	%
2012		2		8,000		77,000		7	%
2013		3		18,000		178,000		17	%
2014		4		51,000		755,000		70	%
2015 and beyond		3		7,000		12,000		1	%

28

701 Arboretum

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		2		45,000	$	673,000		80	%
2012		1		11,000		150,000		18	%
2013		1		1,000		15,000		2	%
2014 and beyond		—		—		—		—

Jacksonville Property — Jacksonville, Florida

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		—		—	$	—		—
2012		—		—		—		—
2013		—		—		—		—
2014		—		—		—		—
2015 and beyond		2		587,000		386,000		100	%

Deer Valley Medical Building — Deer Valley, Arizona

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		—		—	$	—		—
2012		—		—		—		—
2013		—		—		—		—
2014		1		2,000		50,000		31	%
2015 and beyond		2		48,000		112,000		69	%

Crossroads I at Meridian— Englewood, Colorado

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		4		20,000	$	361,000		34	%
2012		1		2,000		40,000		4	%
2013		1		10,000		200,000		19	%
2014		2		2,000		42,000		4	%
2015 and beyond		3		31,000		423,000		39	%

29

Crossroads II at Meridian— Englewood, Colorado

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		3		44,000	$	83,000		68	%
2012		2		6,000		14,000		11	%
2013		2		5,000		8,000		7	%
2014		—		—		—		—
2015 and beyond		2		12,000		17,000		14	%

Equity Investments

The following tables set forth certain information concerning lease expirations (assuming no renewals) as of December 31, 2010 for our equity investment operating properties.

Sealy Equity Investment

Sealy Northwest Atlanta, LP

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		23		94,000	$	1,041,000		37	%
2012		14		54,000		544,000		19	%
2013		13		68,000		529,000		19	%
2014		4		16,000		109,000		4	%
2015 and beyond		11		121,000		576,000		21	%

Sealy Newmarket, LP

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		14		118,000	$	1,682,000		49	%
2012		3		18,000		238,000		7	%
2013		6		61,000		696,000		20	%
2014		—		—		—		—
2015 and beyond		11		104,000		820,000		24	%

Sealy Airpark Nashville, LP

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		22		220,000	$	1,913,000		24	%
2012		18		239,000		2,001,000		25	%
2013		18		85,000		747,000		9	%
2014		11		121,000		929,000		12	%
2015 and beyond		17		297,000		2,447,000		30	%

30

Marc Equity Investments

8 South Michigan

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		19		24,000	$	534,000		15	%
2012		15		16,000		355,000		10	%
2013		14		27,000		598,000		16	%
2014		8		20,000		378,000		10	%
2015 and beyond		26		76,000		1,762,000		49	%

11 East Adams Street

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		5		18,000	$	323,000		10	%
2012		5		19,000		359,000		11	%
2013		5		8,000		156,000		5	%
2014		3		7,000		142,000		5	%
2015 and beyond		12		74,000		2,163,000		69	%

29 East Madison

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		15		25,000	$	571,000		13	%
2012		32		50,000		1,428,000		32	%
2013		8		23,000		722,000		16	%
2014		5		23,000		193,000		4	%
2015 and beyond		22		89,000		1,517,000		35	%

30 North Michigan Avenue

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		50		44,000	$	1,149,000		21	%
2012		46		37,000		948,000		17	%
2013		24		14,000		345,000		6	%
2014		16		19,000		538,000		10	%
2015 and beyond		50		85,000		2,464,000		46	%

223 West Jackson Street

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		5		8,000	$	164,000		7	%
2012		3		3,000		59,000		3	%
2013		4		13,000		156,000		7	%
2014		6		16,000		414,000		18	%
2015 and beyond		15		60,000		1,467,000		64	%

31

4415 West Harrison Street

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		19		45,000	$	765,000		36	%
2012		8		14,000		267,000		13	%
2013		6		20,000		246,000		12	%
2014		3		11,000		173,000		8	%
2015 and beyond		5		35,000		680,000		31	%

2000-2060 Algonquin Road

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		21		24,000	$	326,000		52	%
2012		4		7,000		76,000		12	%
2013		6		17,000		126,000		20	%
2014		2		4,000		29,000		5	%
2015 and beyond		5		19,000		75,000		11	%

1701 East Woodfield Road

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		19		22,000	$	454,000		16	%
2012		20		42,000		704,000		25	%
2013		19		32,000		715,000		26	%
2014		8		12,000		154,000		6	%
2015 and beyond		9		39,000		739,000		27	%

2720 River Road

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		20		26,000	$	421,000		31	%
2012		17		24,000		375,000		27	%
2013		8		11,000		134,000		10	%
2014		7		17,000		272,000		20	%
2015 and beyond		7		12,000		170,000		12	%

3701 Algonquin Road

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		6		25,000	$	435,000		16	%
2012		4		7,000		110,000		4	%
2013		7		41,000		756,000		27	%
2014		3		24,000		446,000		16	%
2015 and beyond		6		59,000		1,061,000		37	%

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2205-2255 Enterprise Drive

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		4		13,000	$	215,000		11	%
2012		6		16,000		261,000		13	%
2013		4		12,000		192,000		10	%
2014		5		36,000		612,000		31	%
2015 and beyond		7		36,000		722,000		35	%

900 Ridgebrook

	Number of		Aggregate by		2010 Rental		% of Total
	Tenants Whose		Ft. Covered by		Revenue for		Annualized
	Leases Expire		Expiring Leases		Leases Expiring		Rental Revenue
2011		22		36,000	$	621,000		42	%
2012		8		9,000		163,000		11	%
2013		10		16,000		305,000		20	%
2014		4		9,000		88,000		6	%
2015 and beyond		9		23,000		316,000		21	%

Mortgage Loans

Information pertaining to the terms of the first mortgages for each of the properties is included in the table at the beginning of ITEM 2 — Properties.

ITEM 3 — LEGAL PROCEEDINGS

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 Trust does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Trust. As of December 31, 2010, the Trust was not involved in any material litigation.

ITEM 4 —RESERVED

33

PART II

ITEM 5 — MARKET FOR TRUST’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Common Shares are listed for trading on the New York Stock Exchange, under the symbol “FUR.”

The table below sets forth the high and low sales prices as reported by the New York Stock Exchange for our Common Shares for each of the periods indicated.

	High		Low
Year Ended December 31, 2009:
First quarter	$	12.30	$	5.83
Second quarter		10.83		6.63
Third quarter		10.15		8.44
Fourth quarter		11.38		8.70
Year Ended December 31, 2010:
First quarter	$	13.19	$	10.59
Second quarter		14.30		10.10
Third quarter		14.59		11.01
Fourth quarter		13.84		11.80

Holders

As of December 31, 2010 there were 576 record holders of our Common Shares.

Dividends

In order to retain REIT status, and thus avoid paying federal corporate tax, we are required by the Code to distribute at least 90% of our REIT taxable income. Dividends declared on Common Shares in each quarter for the last two years are as follows:

Quarter Ended	2010		2009
March 31	$	0.1625	$	0.2500
June 30		0.1625		0.2500
September 30		0.1625		0.2500
December 31		0.1625		0.1625

Pursuant to the terms of our Series B-1 and Series C Preferred Shares, we are required to pay quarterly dividends of $0.40625 per Preferred Share, all of which were paid during 2010 and 2009.

See Item 7 — Common Share Dividends.

Unregistered Share Issuances

During 2008, at the request of holders of our Series B-1 Preferred Shares we issued 548,389 of our Common Shares in redemption of 493,552 Series B-1 Preferred Shares. There were no requests for redemptions in 2009. In addition, during 2009 and 2008, we issued a total of 170,207 and 249,638 Common Shares pursuant to our Dividend Reinvestment and Stock Purchase Plan resulting in net proceeds of approximately $1,615,000 and $4,407,000, respectively.

34

On October 12, 2009, we offered holders of the Series B-1 Preferred Shares the right, in a private transaction, to convert all or any portion of their Series B-1 Preferred Shares into an equivalent number of newly-issued Series C Preferred Shares. This right, which we refer to as the Conversion Offer, enabled the holders of the Series B-1 Preferred Shares to convert one Series B-1 Preferred Share into one Series C Preferred Share. Upon expiration of the Conversion Offer, holders of Series B-1 Preferred Shares had elected to convert an aggregate of 544,000 Series B-1 Preferred Shares into Series C Preferred Shares and, effective November 1, 2009, 544,000 Series C Preferred Shares were issued. As a result, effective November 1, 2009, we had 852,000 Series B-1 Preferred Shares and 544,000 Series C Preferred Shares outstanding.

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

The Series C Preferred Shares have substantially the same rights as the Series B-1 Preferred Shares including dividend rate, liquidation preference and mandatory redemption date, but are junior in right of payment to the Series B-1 Preferred Shares. However, the initial conversion price of the Series C Preferred Shares is $14.00, which is a reduction from the $22.50 conversion price on the Series B-1 Preferred Shares. Additionally, under the terms of the Series C Preferred Shares, we are permitted to issue additional preferred shares which are on par with the Series C Preferred Shares, subject to certain limitations, without the consent of the holders of the Series C Preferred Shares. We are not permitted to issue additional preferred shares which are on par with the Series B-1 Preferred Shares.

35

Performance Graph

The following graph is a comparison of the five-year cumulative return of Common Shares, a peer group index and the Morgan Stanley REIT Index (“MSCI US REIT”) for the periods shown. The peer group consists of REITs with diverse investments which is in contrast to REITs which target a certain asset type, class or geographic location. The peer group REITs also have current market values as of January 12, 2011 under $750,000,000. The graph assumes that $100 was invested on December 31, 2005 in our Common Shares, a peer group index and the Morgan Stanley REIT Index and that all dividends were reinvested without the payment of any commissions. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the graph. It should also be noted that if Common Shares were purchased at times after December 31, 2005, the results depicted would not have been the same.

	Period Ended
Index	12/31/05		12/31/06		12/31/07		12/31/08		12/31/09		12/31/10
Winthrop Realty Trust		100.00		126.31		104.89		46.78		51.90		64.30
MSCI US REIT (RMS)		100.00		135.92		113.06		70.13		90.20		115.89
Peer Group Index		100.00		122.90		88.59		64.72		68.95		80.45

36

ITEM 6 — SELECTED FINANCIAL DATA

The following table sets forth selected, historical, consolidated financial data for the Trust and should be read in conjunction with the Consolidated Financial Statements of the Trust and Notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Annual Report on Form 10-K.

	Years Ended December 31,
	2010			2009			2008			2007			2006
Operating Results (in thousands, except per share data)
Revenue	$	55,367		$	47,357		$	43,952		$	49,608		$	52,602
Income (loss) from continuing operations (1)	$	18,480		$	(85,212	)	$	(70,383	)	$	3,167		$	42,445
Income (loss) from discontinued operations (2)		(2,003	)		865			2,207			(686	)		491
Net income (loss)		16,477			(84,347	)		(68,176	)		2,481			42,936
Preferred dividends		(288	)		(147	)		—			—			—
Net income (loss) applicable to Common Shares	$	16,189		$	(84,494	)	$	(68,176	)	$	2,481		$	42,936
Per Common Share
Income (loss) from continuing operations, basic	$	0.81		$	(5.24	)	$	(4.74	)	$	0.24		$	3.62
Income (loss) from discontinued operations, basic (2)		(0.09	)		0.05			0.15			(0.05	)		0.05
Net income (loss) applicable to Common Shares, basic	$	0.72		$	(5.19	)	$	(4.59	)	$	0.19		$	3.67
Income (loss) from continuing operations per Common Share, diluted	$	0.81		$	(5.24	)	$	(4.74	)	$	0.24		$	3.54
Income (loss) from discontinued operations, diluted		(0.09	)		0.05			0.15			(0.05	)		0.03
Net income (loss) applicable to Common Shares, diluted	$	0.72		$	(5.19	)	$	(4.59	)	$	0.19		$	3.57
Dividends declared per Common Share	$	0.65		$	0.9125		$	1.35		$	2.15		$	1.50
Balance Sheet Data: (in thousands)
Total Assets	$	610,128		$	493,192		$	578,094		$	745,447		$	851,620
Total Debt (3)	$	277,193		$	238,067		$	299,865		$	335,191		$	362,522
Non-Controlling redeemable preferred interest	$	3,221		$	12,169		$	—		$	—		$	—
Total Shareholders’ Equity	$	295,771		$	217,089		$	248,250		$	291,794		$	323,586

(1)	Income (loss) from continuing operation, including per share data, are net of non-controlling interests.
(2)	The results of the Biloxi, Mississippi property were classified as discontinued operations for 2006 through 2008. The results of Ventek were classified as discontinued operations for 2006 through 2008. The results of the Athens, Georgia; Lafayette, Louisiana; Knoxville, Tennessee and Sherman, Texas properties were classified as discontinued operations for 2006 through 2010. The results of the Creekwood, Apartment property were classified as discontinued operations for 2007 through 2009.
(3)	For comparability purposes, the Total Debt balances for 2007 and 2006 do not include repurchase agreements of $75,175 and $111,911, respectively. These debt securities were sold in January 2008.

37

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “would,” “may” or similar expressions in this Annual Report on Form 10-K. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those set forth under “Forward Looking Statements” and “ITEM 1A — Risk Factors,” as well as our other filings with the SEC. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on forward-looking statements, which are based on information, judgments and estimates at the time they are made, to anticipate future results or trends.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. This section should be read in conjunction with the financial statements, footnotes thereto and other items contained elsewhere in this report.

Overview

As a diversified REIT, we operate in three strategic segments: (i) operating properties; (ii) loan assets; and (iii) REIT securities. As such, we seek to focus our investing in the segment we believe will generate the greater overall return to us given market conditions at the time. During 2010, we shifted our investment focus from REIT securities which we believed were undervalued in 2009 to loan assets as our belief was, and continues to be, that investments in that level of the capital stack are more likely to generate a greater overall return. Accordingly, we invested in new loan assets and divested of a substantial portion of our REIT securities. We funded our investment activity in 2010 from cash reserves, proceeds from our REIT securities divestments and our public offering in September 2010 which netted cash proceeds of approximately $67,774,000.

At December 31, 2010, we held $45,257,000 in unrestricted cash and cash equivalents and $33,032,000 in REIT securities. In addition, in March 2011 we extended and modified our revolving line of credit. See “Liquidity and Capital Resources” below.

With respect to our operating results for 2010, net income attributable to Common Shares was $16,189,000 or $0.72 per Common Share as compared with a loss of $84,494,000 or loss of $5.19 per Common Share. The most significant factor in this increase was the increase in earnings from our loan assets segment due to our additional investments in 2010 and the negative impact in 2009 to this segment caused by the impairments taken on our Concord investment. See “Results of Operations” below.

As discussed in more detail below, for 2011 we expect that it is likely that our overall operating results at our existing operating properties will decline due primarily to the overall portfolio decline in occupancy experienced in 2010. In addition, we expect that operations from our loan assets segment will be enhanced as we continue to seek investments in this segment and our expectation that with the recent favorable ruling in the Concord Real Estate CDO-1, Ltd. litigation we will receive cash distributions from our investment in CDH CDO. With respect to our REIT securities segment, we expect to invest when we see opportunity and divest in our holdings where we believe that our return has been maximized.

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Loan Assets

As noted above, consistent with our investment strategy to focus our investing in the segment we believe will generate the greater overall return to us, during 2010 we concentrated our acquisition activity on our loan asset segment. The concentration in the loan asset segment was due to our belief that loan assets provided the best area for a current return in the form of interest payments as well as appreciation either through acquiring loan assets at a discount or acquiring loan assets with the expectation of a borrower default that will lead to foreclosure and an equity ownership interest. In acquiring loan assets, we target loan investments with underlying collateral value, future income return potential and in certain cases, non-performing loans with the possibility that our debt position will be converted into equity participation. As a result, we invested approximately $119,352,000 in new loan assets during 2010 consisting of whole loans, B-notes, mezzanine loans and loan securities. During 2010 we foreclosed on the collateral securing three of our loan assets we acquired in 2010 with a carrying value of $19,210,000 resulting in our becoming the owner of the underlying properties. For a description of our loan assets acquired during 2010 see ITEM 8. Financial Statements, Note 4.

Operating Properties

The 2010 operating properties segment was negatively impacted by: (i) a weak overall economy; (ii) Kroger electing not to renew its leases at six Kroger properties; and (iii) the Churchill property lawsuit. During 2010 we acquired four new operating properties: one through a direct acquisition and three as a result of our foreclosure on previously acquired loan assets as discussed above. Through these transactions we acquired four recently constructed real estate assets at a low cost in distressed transactions and added an aggregate 322,000 square feet of Class A office space and 180 multi-family apartment units to our operating property portfolio.

In respect to leasing activity in 2011, we are aggressively marketing the properties for lease through direct contact with both tenants and brokers. As a result we are experiencing increased leasing traffic from the prior year in most regions but do not expect that new leases in 2011 will fully account for the losses in 2010. With respect to our 2010 acquisitions we have underwritten a relatively long lease up period of approximately 18 to 24 months and anticipate that certain of our other properties will continue to have leasing issues in 2011. Consequently, as discussed in more detail below, our earnings from our operating properties are anticipated to decline in 2011.

While we plan to fund operating shortfalls on certain investments, we anticipate that a lack of cash flow at certain properties may cause lenders to place these loans in special servicing. Special servicing status on these mortgage loans will prompt work out discussions with banks affording us the opportunity to negotiate more reasonable loan terms in an effort to improve long term operating results. There can be no assurance, however, we will be successful in negotiating more favorable terms.

Consolidated Operating Properties — The average occupancy of our consolidated properties was approximately 94.1% during the year ended December 31, 2010. As of December 31, 2010 our consolidated properties were approximately 90.8% leased compared to approximately 84.6% leased at December 31, 2009. At January 31, 2011 our consolidated properties were 88.1% leased, excluding our Churchill, Pennsylvania property which contains 1,008,000 square feet and was 16% leased.

Unfavorable trends in revenue on our wholly owned properties are expected to continue during 2011 primarily as a result of (i) changes in our net leased retail portfolio created by the non-renewal of expired leases on six properties; (ii) challenges in leasing two of our Lisle, Illinois properties; and (iii) expiration of the lease at our Churchill property.

Of the six leases which expired and were not renewed in 2010 in the net leased retail portfolio, the Athens, Georgia property was sold, the Sherman, Texas property reverted back to the land owner and two others, Knoxville, Tennessee and Lafayette, Louisiana were transferred into discontinued operations during 2010. In February 2011 we entered into an agreement to sell the St. Louis, Missouri, and Knoxville, Tennessee properties, subject in each case to the respective buyer’s due diligence. We anticipate that the sale of these properties will be consummated, if at all, during the second quarter of 2011. The Denton, Texas property has been subdivided and is 63% leased as of December 31, 2010.

Occupancy has dropped to 52% on our Lisle, Illinois property also known as 550-560 Corporetum as of December 31, 2010 from 71% at December 31, 2009. Various smaller tenants have vacated and one significant tenant representing approximately 13% of the property square footage did not renew its lease at expiration in May 2010. At our other Lisle, Illinois property, referred to as 701 Arboretum, we have received notice from our major tenant that they will be vacating their space at the expiration of their current lease term on March 31, 2011. As a result, this property will be 32% occupied as of April 1, 2011. We continue to aggressively market these properties for lease, however, there can be no assurance that we will be able to find replacement tenants in the near term.

The tenant at our Churchill, Pennsylvania property elected not to exercise its renewal option at the December 31, 2010 expiration. The property is in need of substantial repairs and refurbishing, and we are currently seeking damages from the prior tenant for failure to return the property in the condition required by the lease. Additionally, we are actively marketing the property for lease.

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Sealy Equity Investments in Operating Properties — As of December 31, 2010 we continue to hold equity interests in three real estate ventures with Sealy & Co. which have an aggregate of approximately 2,097,000 rentable square feet consisting of 18 office flex buildings and 13 light distribution and service center properties. The investment properties are located in Northwest Atlanta, Georgia; Atlanta, Georgia; and Nashville, Tennessee and had occupancies of 75%, 66% and 86%, respectively, at December 31, 2010 as compared to occupancy of 73%, 78% and 86%, at December 31, 2009. Our Georgia properties continue to have historically low occupancy but are performing in line with the market, and we have not lost any tenants to competing properties. Finally, our Nashville, Tennessee property is outperforming the market. The properties are being aggressively marketed for lease. We received cash distributions from operations of $733,000 from the Nashville, Tennessee property for the year ended December 31, 2010. We received no cash distribution from the two Atlanta investments for the year ended December 31, 2010.

The Sealy properties have $139,750,000 of mortgage debt at December 31, 2010 with $102,750,000 maturing in 2012 and $37,000,000, maturing in 2016. Both Atlanta, Georgia properties are currently in special servicing. We together with our joint venture partner, are attempting to negotiate with the special servicer a restructuring of the debt. Both properties have ceased making their debt sevice payments until the loans are restructured. There can be no assurance that a restructuring of the loans will be accomplished.

Marc Realty Equity Investments in Operating Properties- As of December 31, 2010, we held equity interests in 12 properties with Marc Realty which consist of an aggregate of approximately 1,977,000 rentable square feet of office and retail space which was 82.2% occupied as compared to 84.1% occupied at December 31, 2009.

Five downtown Chicago properties contain approximately 959,000 rentable square feet of the aggregate Marc Realty portfolio and accounted for $37,562,000 of our December 31, 2010 carrying value. These five properties had occupancy of 83.4% at December 31, 2010, compared to 90.6% occupancy at December 31, 2009. The decline in occupancy in 2010 is primarily the result of the loss of one major tenant at one of the downtown properties.

The balance of the portfolio, located in the Chicago suburbs represents $24,588,000 of our December 31, 2010 carrying value, contains approximately 1,018,000 square feet and was 80.9% occupied at December 31, 2010 compared to 79.0% occupied at December 31, 2009.

At December 31, 2010, the Marc Realty properties are encumbered with $86,236,000 of mortgage debt, with $19,290,000 of mortgage debt maturing in 2011, $10,375,000 maturing in 2012 and the remainder in 2013 or later. We and our venture partner are negotiating with the lenders to further extend the debt balances maturing in 2011.

REIT Securities

During 2010 we reduced new investment activity in REIT securities. We sold REIT securities with a cost basis of $23,163,000 and received cash proceeds of $31,249,000. We expect to continue to hold our REIT preferred securities but will divest if needed to fund future acquitistions. As of December 31, 2010 our portfolio of REIT securities decreased to $33,032,000.

Liquidity and Capital Resources

At December 31, 2010, we held $45,257,000 in unrestricted cash and cash equivalents and $33,032,000 in REIT securities. In addition, as of December 31, 2010 we had $9,550,000 available to draw on our $35,000,000 revolving line of credit.

We believe that cash flow from operations will continue to provide adequate capital to fund our operating and administrative expenses, as well as debt service obligations in the short term. As a REIT, we must distribute annually at least 90% of our REIT taxable income. As a result of this dividend requirement, we, like other REITs, are unable to reinvest all of our operating cash flow and are dependent on raising capital through equity and debt issuances or forming ventures with investors to obtain funds with which to expand our business. Accordingly, we anticipate that capital with which to make future investment and financing activities will be provided from borrowings, the issuance of additional equity and debt securities and proceeds from sales of existing assets.

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Our primary sources of funds include:

• the use of cash and cash equivalents;

• rents and reimbursements received from our operating properties;

• payments received under our loan assets;

• interest and dividends received from investments in REIT securities;

• cash distributions from joint ventures;

• borrowings under our credit facility;

• asset specific borrowings; and

• the issuance of equity and debt securities.

In addition, in light of the recent Delaware Supreme Court’s affirmation of the Delaware Court of Chancery’s ruling that the notes held by a subsidiary of CDH CDO in CDO-1 are deemed cancelled effective January 2010, we expect to receive cash distributions from our CDH CDO investment through our interest in the entity that provides collateral management services to CDO-1 as well as through our equity ownership of CDH CDO.

Public Offering

On September 27, 2010 we closed a public offering of 5,750,000 Common Shares at a price of $12.25 per share before underwriter discount, and received net proceeds of approximately $67,000,000 which we utilized for the acquisition of new investments in the fourth quarter of 2010 and the first quarter of 2011.

Debt Maturities

We have a $35,000,000 revolving line of credit which matures on December 16, 2011. We drew down $25,450,00 in July in connection with new loan acquisitions and this amount remains outstanding on December 31, 2010.

At December 31, 2010, our balance sheet contains mortgage debt payable of $230,443,000. We have $27,766,000 of mortgage debt maturing in 2011, $32,975,000 maturing in 2012, $16,116,000 maturing in 2013 with the remainder maturing in 2015 or later.

On March 4, 2011 we financed our Plantation, Florida property with an $11,000,000 first mortgage loan bearing interest at 6.483% and maturing on April 1, 2018. The net proceed of approximately $10,676,000 and cash on hand of approximately $6,143,000 were used to pay down our mortgage loan payable with KeyBank by $16,819,000.

In March 2011, we amended our existing revolving line of credit with KeyBank, 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%. On March 7, 2011, we utilized $8,799,000 to repay the maturing mortgage loans encumbering our Andover and Burlington properties and approximately $2,186,000 to payoff the balance on our mortgage loan payable with Keybank. In addition, we drew down $16,000,000 on the line of credit to fund new investments.

As a result of these transactions we have no mortgage loans for consolidated properties maturing in 2011.

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

Cash Flows

Our liquidity based upon cash and cash equivalents decreased by approximately $21,236,000 from $66,493,000 at December 31, 2009 to $45,257,000 at December 31, 2010.

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Our cash flow activities for the year ended December 31, 2010 are summarized as follows (in thousands):

Net cash flow provided by operating activities	$	19,612
Net cash flow used in investing activities		(112,650	)
Net cash flow provided by financing activities		71,802
Decrease in cash and cash equivalents	$	(21,236	)

Operating Activities

For the year ended December 31, 2010, our operating activities generated net income of $17,365,000 and positive cash flow of $19,612,000. Our cash provided by operations reflects our net income adjusted by: (i) a reduction for non-cash items of $5,901,000 representing primarily loan discount accretion and unrealized gains on loan securities offset by adding back depreciation and amortization expenses; (ii) $5,610,000 of distributions from non-consolidated interests; and (iii) a net increase due to changes in other operating assets and liabilities of $2,538,000. See our discussion of Results of Operations below for additional details on our operations.

Investing Activities

Net cash used in investing activities of $112,650,000 for the year ended December 31, 2010 was comprised primarily of the following:

• $115,854,000 for the acquisition of eleven new loans receivable;

• $2,949,000 for additional loan advances under existing facilities;

• $3,498,000 for the issuance of a new loan receivable;

• $10,871,000 for investment in our PSW NYC joint venture;

• $7,800,000 for investment in our Riverside loan joint venture;

• $6,961,000 for investment in our Marc Realty equity investments;

• $2,113,000 to fund a tenant improvement escrow for the Deer Valley Medical Center;

• $6,110,000 for purchases of REIT securities carried at fair value;

• $5,276,000 for investment in capital and tenant improvements at our operating properties;

• $9,409,000 for the acquisition of the land underlying eight of our operating properties;

• $7,112,000 for the purchase of loan securities; and

• $8,700,000 for the acquisition of a new operating property (Crossroads I).

These uses of cash flow were offset primarily by:

• $31,249,000 in proceeds from the sale of securities carried at fair value;

• $9,876,000 in proceeds from the sale at par value of 50% interest in the 500-512 Seventh Avenue B Participation;

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

• $6,540,000 received on full satisfaction of the Driver loan;

• $8,200,000 received on full satisfaction of the 1701 E. Woodfield Road loan;

• $9,625,000 return of capital distribution from our PSW NYC equity investment; and

• $1,750,000 in proceeds from the sale of our Athens, Georgia property.

Financing Activities

Net cash provided by financing activities of $71,802,000 for the year ended December 31, 2010 was comprised primarily of the following:

• $66,774,000 in proceeds from the issuance of 5,750,000 Common Shares pursuant to our public offering; and

• $25,450,000 drawn down on our Revolving Line of Credit.

These sources of cash flow were offset primarily by:

• $14,573,000 for dividend payments on our Common Shares; and

• $10,199,000 for mortgage loan repayments which included $3,537,000 of the principal repayments related to the disposition of three operating properties.

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Future Cash Commitments

Future Funding Requirements

In addition to our initial purchase price of certain loans and operating properties, we have future funding requirements which total approximately $8,079,000 at December 31, 2010.

Common Share Dividends

In paying dividends we seek to have our quarterly dividends track cash flow from operations. As a result of our emphasis on total return, while we seek to achieve a stable, predictable dividend for our shareholders, we do not select or manage our investments for short-term dividend growth, but rather towards achieving overall superior total return. While we intend to continue paying dividends each quarter, the amount of our dividend will depend on the actual cash flow, financial condition, capital requirements, utilization of available capital losses and net operating loss carry forwards, distribution requirements for REITs under the Internal Revenue Code, and such other factors as our Board of Trustees deem relevant. Subject to the foregoing, we expect to continue distributing our current cash flow from operations after reserving normal and customary amounts thereby allowing us to maintain adequate capital reserves. In addition, when deemed prudent or necessitated by applicable distribution requirements for REITs under the Internal Revenue Code, we may make one or more special distributions during any particular year. However, during a favorable investing environment, we expect that we will utilize our carry forward capital losses to shelter gains from the disposition of our assets so we may use the proceeds for investment. We expect to continue applying these standards with respect to our dividends on a quarterly basis which may cause the dividends to increase or decrease depending on these various factors.

During 2010 we have paid a regular quarterly dividend of $0.1625 per Common Share. We paid regular quarterly dividends of $0.40625 per Series B-1 Preferred Share and Series C Preferred Share for all four quarters of 2010.

Contractual Obligations

The following table summarizes our payment obligations under contractual obligations, including all fixed and variable rate debt obligations, except as otherwise noted, as of December 31, 2010 (in thousands):

			Less than						After
	Total		1 Year		2-3 Years		4-5 Years		5 Years
Mortgage loans payable (principal and interest) (1)	$	284,083	$	46,273	$	80,104	$	33,978	$	123,728
Revolving line of credit (principal and interest)		26,108		26,108		—		—		—
Ground lease obligations		1,932		485		847		600		—
Advisors’ fee (2)		6,838		6,838		—		—		—
Series B-1 Preferred Shares (3)		21,300		—		21,300		—		—
Series C Preferred Shares (3)		3,600		—		3,600		—		—
	$	343,861	$	79,704	$	105,851	$	34,578	$	123,728

(1)	Does not reflect financing activity subsequent to December 31, 2010.
(2)	Advisor’s fee based upon the terms of the Advisory Agreement, effective January 1, 2011, with no effect given to any equity that may be issued after December 31, 2010. No amounts have been included for subsequent renewal periods of the Advisory Agreement.
(3)	Series B-1 and Series C Preferred Shares assumes mandatory redemption date in February 2012 with no further conversions.

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We carry comprehensive liability and all risk property insurance covering fire, flood, extended coverage, “acts of terrorism,” as defined in the Terrorism Risk Insurance Act of 2002 and rental loss insurance with respect to our operating properties where coverage is not provided by our net lease tenants. Under the terms of our net leases, the tenant is obligated to maintain adequate insurance coverage.

Our debt instruments, consisting of mortgage loans secured by our operating properties (which are generally non-recourse to us), contain customary covenants requiring us to maintain insurance. Although we believe that we have adequate insurance coverage under these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. Further, if lenders insist on greater coverage than we are able to obtain at reasonable costs, it could adversely affect our ability to finance and/or refinance our properties and expand our portfolio.

Comparability of Financial Data from Period to Period

The comparability of financial data from period to period is affected by several items including (i) the timing of our property acquisitions and leasing activities; (ii) the purchases and sales of assets and investments; (iii) when material other-than-temporary impairment losses on assets in our portfolio are taken; and (iv) the reclassification of assets. In this regard, the comparability of financial results for the years presented were impacted by the addition of four operating properties (one direct acquisition and three loan foreclosures) in 2010. The acquisition of several loan assets in 2010, the divestiture of several REIT securities in 2010, the write-down of our investment in Lex-Win Concord to zero during the second quarter of 2009 and the reclassification of certain Marc Realty assets from an aggregated preferred equity investment to 12 individual common equity investments as of July 1, 2009.

Results of Operations

Our results of operations are discussed below by segment:

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

• Loan Assets — our loans receivable, loan securities carried at fair value, and equity investments in loan assets;

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

• Corporate — non-segment specific results which includes interest on cash reserves, general and administrative expenses and other non-segment specific income and expense items.

The following table summarizes our assets by segment at year end (in thousands):

	2010		2009
Operating properties	$	373,142	$	313,682
Loan assets		134,269		31,774
REIT securities		33,032		52,597
Corporate
Cash and cash equivalents		45,257		66,493
Restricted cash		8,593		9,505
Accounts receivable and prepaids		12,402		14,559
Deferred financing costs		1,158		1,495
Discontinued Operations		2,275		3,087
Total Assets	$	610,128	$	493,192

The increase in operating property assets was due primarily to the acquisition of four operating properties and eight land parcels underlying our existing properties during 2010. In addition, we made $6,121,000 of building improvements to our existing properties during the year. These increases were partially offset by the disposition of three properties and the classification to discontinued operations of one additional property.

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The increase in loan assets was due primarily to the acquisition of 12 new loan assets for an aggregate investment of $119,352,000. In addition, we recognized $8,782,000 of loan discount accretion income during 2010.

The decrease in REIT securities assets was primarily the result of our divestiture of these assets. We received proceeds of $31,249,000 from the sale of securities in 2010 while only investing $6,110,000 in acquiring new securities during the year.

The following table summarizes our results from continuing operations by segment for each of the years ended December 31 (in thousands):

	2010			2009			2008
Operating properties (1)	$	2,588		$	(8,345	)	$	2,666
Loan assets (1)		19,218			(99,830	)		(67,770	)
REIT securities		8,273			27,002			1,346
Corporate expenses		(10,711	)		(3,022	)		(6,142	)
Consolidated income (loss) from continuing operations	$	19,368		$	(84,195	)	$	(69,900	)

(1) As of July 1, 2009, in conjunction with the restructuring of our preferred equity investment in Marc Realty, our investments in the Marc Realty portfolio which were previously included in the loan assets business segment are now classified as equity investments and are included in the operating properties segment.

Comparison 2010 to 2009

Operating Properties

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

	2010			2009
Rents and reimbursements	$	38,239		$	40,021
Operating expenses		(8,674	)		(7,042	)
Real estate taxes		(2,542	)		(2,542	)
Impairment loss on investments in real estate		—			(10,000	)
Equity in income of Marc Realty investments		1,776			281
Impairment loss on Marc Realty equity investment		—			(2,500	)
Equity in loss of Sealy Northwest Atlanta		(710	)		(457	)
Equity in loss of Sealy Airpark Nashville		(1,107	)		(1,056	)
Equity in loss of Sealy Newmarket		(1,193	)		(691	)
Operating income		25,789			16,014
Depreciation and amortization expense		(10,008	)		(10,585	)
Interest expense		(13,193	)		(13,774	)
Net income (loss)	$	2,588		$	(8,345	)

Operating income from our operating properties, which we define as all items of income and expense directly derived from or incurred by this segment before depreciation, amortization and interest expense, increased by $9,775,000 compared to the prior year period. The increase was due primarily to:

• an increase of $1,495,000 in income from our 12 Marc Realty equity investments. We received cash distributions of $4,147,000 from the Marc Realty equity investments during the year ended December 31, 2010;

• rents and reimbursements of $831,000 from our four 2010 property acquisitions;

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• an increase of $252,000 in rents and reimbursements at our Jacksonville, Florida property as a result of the property being 100% occupied for the full year in 2010;

• a $10,000,000 impairment loss recorded in 2009 on our Churchill, Pennsylvania property; and

•	a $2,500,000 other-than-temporary impairment loss recorded in 2009 on our Marc Realty equity investment in the property located at 1701 East Woodfield Rd, Schaumburg, Illinois;
	Partially offset by:

• a $1,632,000 increase in operating expenses due primarily to increased cost of $491,000 at our River City property, a $205,000 increase in costs at our Andover, Massachusetts property as a result of the lease in 2010 being a gross lease as compared to a net lease in 2009, a $956,000 increase in legal and professional fees related to tenant disputes primarily in connection with the Churchill tenant litigation and $550,000 of operating expenses at our four 2010 property acquisitions;

• a decrease of $846,000 in rents and reimbursements from our two Lisle, Illinois properties due to an approximate 20% decrease in average occupancy at one of the properties and an approximate 10% decrease at the other property in 2010;

• an $806,000 increase in losses from our Sealy equity investments due primarily to a $502,000 increase in loss related to our Newmarket office complex in Atlanta, Georgia which experienced a 12% loss in occupancy during 2010;

• a decrease of $745,000 in rents and reimbursements at our Andover, Massachusetts property due to the expiration of the lease in place at December 31, 2009. This space was leased effective March 18, 2010;

• a decrease of $571,000 in rents and reimbursements at our One East Erie property as a result of an approximate 4% decrease in average occupancy

• a decrease of $417,000 in rents and reimbursements at our River City property due to the turnover of tenants; and

• a decrease of $340,000 in rents and reimbursements pursuant to a restructuring as of April 1, 2009 which provided for a reduction in rent in exchange for a ten-year extension of the lease for our Plantation, Florida property.

Depreciation and amortization expense decreased by $577,000 primarily as a result of certain assets being fully amortized during 2010. Interest expenses related to our operating properties decreased by $581,000 primarily as a result of normal amortization of the mortgage loans payable, which was partially offset by $438,000 of interest expense on our newly acquired Connecticut multi-family property.

Loan Assets

The following table summarizes our results from our loan assets segment for the years ended December 31, 2010 and 2009 (in thousands):

	2010			2009
Interest and discount accretion income	$	14,473		$	3,442
Equity in earnings of preferred equity investment in Marc Realty		338			78
Impairment loss on preferred equity investments		—			(2,186	)
Impairment loss on Lex-Win Concord		—			(31,670	)
Equity in loss of Lex-Win Concord		—			(66,904	)
Equity in earnings of ROIC-Riverside		473			—
Equity in loss of PSW NYC		(1,246	)		—
Realized gain on loan securities carried at fair value		469			—
Unrealized gain on loan securities carried at fair value		5,011			—
Impairment loss on available for sale loan		—			(203	)
Provision for loss on loans receivable		—			(2,152	)
Operating income (loss)		19,518			(99,595	)
General and administrative expense		(300	)		(235	)
Net income (loss)	$	19,218		$	(99,830	)

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Operating income from loan assets, which we define as all items of income and expense directly derived from or incurred by this business segment before general and administrative expense, increased by $119,113,000 from a loss of $99,595,000 in 2009 to income of $19,518,000 in 2010 primarily due to the $31,670,000 impairment loss on Lex-Win Concord and $66,904,000 equity in loss of Lex-Win Concord recognized in 2009. Excluding the impairment loss and equity loss in Lex-Win Concord, operating income from loan assets increased by $20,539,000 for the year ended December 31, 2010 as compared to the year ended December 31, 2009 to income of $19,518,000 from a loss of $1,021,000. The increase was due primarily to:

• a $5,011,000 unrealized gain on loan securities carried at fair value recognized in 2010 and a $469,000 realized gain on loan securities which were paid off at par at maturity in December 2010;

• a $2,152,000 provision for loss on loans receivable related to properties in our Marc Realty portfolio recognized in 2009;

• a $11,031,000 increase in interest income due primarily to $11,713,000 recognized on loan assets acquired since June 2009 which was partially offset by a reduction of $661,000 of interest on our tenant improvement and capital expenditure loans related to the Marc Realty investments which are now reported in the operating properties segment as of July 1, 2009; and

• a reduction of impairments from the prior year resulting in a $2,446,000 increase in earnings from our preferred equity investment in Marc Realty.

Partially offset by:

• a $1,246,000 loss recognized on our 2010 investment in our PSW NYC venture.

REIT Securities

The following table summarizes our results from our REIT securities segment for the years ended December 31, 2010 and 2009 (in thousands):

	2010		2009
Dividends	$	2,655	$	3,894
Gain on sale of securities carried at fair value		558		5,416
Unrealized gain on securities carried at fair value		5,060		17,862
Equity in loss of Lex-Win Acquisition, LLC		—		(95	)
Operating income		8,273		27,077
Interest expense		—		(75	)
Net income	$	8,273	$	27,002

Operating income from REIT securities, which we define as all items of income and expense directly derived from or incurred by this business segment before interest expense, decreased by $18,804,000 over the prior year period. The decrease was due primarily to:

• a $12,802,000 decrease in unrealized gain on securities carried at fair value;

• a $1,239,000 decrease in interest and dividend income primarily as the result of the sale of various securities; and

• a $4,858,000 decrease in realized gain on the sale of securities carried at fair value.

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Corporate

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

	2010			2009
Interest income	$	139		$	172
General and administrative		(8,534	)		(7,068	)
Interest expense		(2,182	)		(2,815	)
Gain on extinguishment of debt		—			6,846
State and local taxes		(134	)		(157	)
Operating loss	$	(10,711	)	$	(3,022	)

The increase in operating loss from corporate operations for the comparable periods was due primarily to:

• a $5,681,000 gain on extinguishment of debt recognized in 2009 resulting from our 2009 purchase of 1,017,105 Series B-1 Preferred Shares at a discount to their liquidation value;

• a $1,165,000 gain on extinguishment of debt recognized in 2009 resulting from the conversion of 544,000 Series B-1 Preferred Shared to Series C Preferred Shares; and

•	A $1,466,000 increase in general and administrative expense due primarily to an increase in the base management fee paid to our advisor of $2,118,000 partially offset by a reduction in professional fees of $642,000.
Partially offset by:

• a $633,000 decrease in corporate interest expense due primarily to lower aggregate payments in 2010 of $897,000 on our Series B-1 Preferred Shares as a result of fewer Series B-1 Preferred Shares outstanding during 2010 offset by an increase in interest expense of $264,000 related to our KeyBank line of credit.

Comparison 2009 to 2008

Operating Properties

The following table summarizes our results from continuing operations for our operating properties segment for the years ended December 31, 2009 and 2008. Certain balances have been reclassified as a result of discontinued operations (in thousands):

	2009			2008
Rents and reimbursements	$	40,021		$	41,504
Operating expenses		(7,042	)		(6,767	)
Real estate taxes		(2,542	)		(2,428	)
Impairment loss on investments in real estate		(10,000	)		(2,100	)
Equity in income of Marc Realty investments		281			—
Impairment loss on Marc Realty equity investment		(2,500	)		—
Equity in loss of Sealy Northwest Atlanta		(457	)		(409	)
Equity in loss of Sealy Airpark Nashville		(1,056	)		(1,023	)
Equity in loss of Sealy Newmarket		(691	)		(250	)
Operating income		16,014			28,527
Depreciation expense		(10,585	)		(11,572	)
Interest expense		(13,774	)		(14,289	)
Net income (loss)	$	(8,345	)	$	2,666

48

For purposes of management’s discussion of our results of operations, operating income for each business segment is defined as all items of income and expense before depreciation, amortization and interest expense. Operating income from our operating properties decreased by $12,513,000 over the prior year period. The decrease was due primarily to:

• a $10,000,000 impairment loss recorded in 2009 as compared to an impairment loss of $2,100,000 recognized in 2008;

• a $2,500,000 other-than-temporary impairment loss on our Marc Realty equity investment in the property located at 1701 East Woodfield Rd, Schaumburg, Illinois;

• a decrease of $1,021,000 in rents and reimbursements from our net lease portfolio due to the reduced rent pursuant to the restructuring and 10-year extension of the lease for our Plantation, Florida property as of January 1, 2009;

• a decrease of $686,000 in rents and reimbursements at our Jacksonville, Florida property due to the loss of two tenants who occupied approximately 80% of the property;

• a decrease of $529,000 in rents and reimbursements from our Lisle, Illinois properties due to an approximate 12% decrease in average occupancy at one of the properties in 2009;

• a $275,000 increase in operating expenses due primarily to increased cost of $145,000 at our One East Erie property, a $380,000 bad debt reserve at our Burlington property as a result of a tenant bankruptcy and a $122,000 increase in legal and professional fees related to tenant disputes which were offset by a $290,000 decrease in costs at our River City property; and

• a $522,000 increase in losses from our Sealy equity investments due primarily to a $441,000 increase in loss related to our Newmarket office complex in Atlanta, Georgia which we held for 12 months in 2009. Losses from the Sealy portfolio are primarily the result of non-cash depreciation and amortization expenses. We received cash distributions of $1,195,000 from the Sealy equity investments for the year ended December 31, 2009.

Partially offset by:

• income of $281,000 in 2009 representing our share of operations from our 12 Marc Realty equity investments since July 1, 2009. We received cash distributions of $1,089,000 from the Marc Realty equity investments during the year ended December 31, 2009;

• an increase of $194,000 in rents and reimbursements at our One East Erie property as a result of a $412,000 increase in rental revenue due to an approximate 1% increase in average occupancy which was partially offset by a $218,000 decline in revenue from the parking facility in 2009; and

• an increase of $577,000 in rents and reimbursements at our River City property due to an approximate 6% increase in average occupancy in 2009.

Depreciation and amortization expense decreased by $987,000 primarily as a result of values assigned to leases in place at the time of acquisition being fully amortized during 2009. Interest expenses related to our operating properties decreased by $515,000 primarily as a result of normal amortization of the mortgage loans payable.

Loan Assets

The following table summarizes our results from our loan assets segment for the years ended December 31, 2009 and 2008 (in thousands):

	2009			2008
Interest income	$	3,442		$	1,532
Equity in earnings of preferred equity investment of Marc Realty		78			5,868
Impairment loss on preferred equity investments		(2,186	)		(7,513	)
Impairment loss on Lex-Win Concord		(31,670	)		(36,543	)
Equity in loss of Lex-Win Concord		(66,904	)		(30,207	)
Gain on sale of mortgage backed securities		—			454
Gain on sale of other assets		—			24
Impairment loss on available for sale loan		(203	)		—
Provision for loss on loan receivable		(2,152	)		(1,179	)
Operating loss		(99,595	)		(67,564	)
General and administrative expense		(235	)		—
Interest expense		—			(206	)
Net loss	$	(99,830	)	$	(67,770	)

49

Operating loss from loan assets increased by $32,031,000 from a loss of $67,564,000 in 2008 to a loss of $99,595,000 in 2009. The increase was due primarily to:

• a $36,697,000 increase in equity in loss from Lex-Win Concord due primarily to our allocable share of the increased operating loss from Concord for the year ended December 31, 2009 compared to the year ended December 31, 2008. In addition, we recorded a $31,670,000 other-than-temporary impairment loss in 2009 to reduce our equity investment in Lex-Win Concord to zero. In 2008, we recorded a $36,543,000 other-than-temporary impairment loss.

• a $5,790,000 decrease in earnings from our preferred equity investment primarily as a result of the restructuring of the Marc Realty portfolio. Items that affected the decrease included a $2,664,000 loss from the transfer of our interest in three of the properties in the Marc Realty portfolio in May 2009, a $2,624,000 decrease in interest earnings and a $511,000 decrease in gains on sale of real estate; and

•	a $973,000 increase in provision for loss on loans receivable related to properties in our Marc Realty portfolio;
Partially offset by:

• a $1,910,000 increase in interest income due primarily to $2,675,000 recognized on loan assets acquired in 2009 which was partially offset by a reduction of $522,000 of interest on our tenant improvement and capital expenditure loans related to the Marc Realty investments which are now reported in the operating properties segment as of July 1, 2009; and

• a $5,327,000 decrease in impairment loss on preferred equity investments. We recognized $2,186,000 of other-than-temporary impairments on four of our Marc Realty preferred equity investments during the year ended December 31, 2009 compared with a $7,513,000 other-than-temporary impairment recognized on four Marc Realty preferred equity investments during the same period in 2008.

REIT Securities

The following table summarizes our results from our REIT securities segment for the years ended December 31, 2009 and 2008 (in thousands):

	2009			2008
Dividends	$	3,894		$	916
Gain on sale of securities carried at fair value		5,416			—
Gain on sale of available for sale securities		—			1,580
Impairment loss on available for sale securities		—			(207	)
Unrealized gain on securities carried at fair value		17,862			24
Equity in loss of Lex-Win Acquisition, LLC		(95	)		(878	)
Operating income		27,077			1,435
Interest expense		(75	)		(89	)
Net income	$	27,002		$	1,346

Operating income from REIT securities increased by $25,642,000 over the prior year period. The increase was due primarily to:

• a $2,978,000 increase due primarily to interest and dividends as the result of the increased investment in REIT securities during the year ended December 31, 2009;

• a $17,862,000 unrealized gain on securities carried at fair value recognized in 2009; and

• a $3,836,000 increase in gain on sale of securities.

50

Corporate

The following table summarizes our results from our corporate business segment for the years ended December 31, 2009 and 2008 (in thousands):

	2009			2008
Interest income	$	172		$	1,670
General and administrative		(7,068	)		(6,887	)
Interest expense		(2,815	)		(7,379	)
Gain on extinguishment of debt		6,846			6,284
State and local taxes		(157	)		(329	)
Other		—			499
Operating loss	$	(3,022	)	$	(6,142	)

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

• a $4,564,000 decrease in corporate interest expense due primarily to lower aggregate payments in 2009 of $3,470,000 on our Series B-1 Preferred Shares as a result of fewer Series B-1 Preferred Shares outstanding during 2009 and a reduction of interest expense of $1,102,000 related to our KeyBank line of credit;

Partially offset by:

• a $1,498,000 decrease in corporate interest income earned on our cash and cash equivalents due primarily to lower yields on U.S. Treasury securities and other depository accounts during 2009 versus 2008; and

• state income taxes decreased by $172,000 to $157,000 for the year ended December 31, 2009 from $329,000 for the year ended December 31, 2008 due primarily to our anticipated lower taxable income for state purposes, after deductions for dividends paid and after the utilization of net operating loss carryforwards, where applicable.

Discontinued Operations

In October 2009 a tenant of our retail net leased properties, The Kroger Company (“Kroger”), notified us of its intention not to exercise its lease renewal options on six buildings containing approximately 281,000 square feet of retail space. Concurrently, Kroger also notified us that it would be exercising its option to purchase one of these six properties, the Athens, Georgia property, resulting in our classifying that property in discontinued operations effective with the fourth quarter of 2009. Upon receipt of the notice, management actively marketed the remaining locations for lease or sale.

The Lafayette, Louisiana and Sherman, Texas locations have been classified as discontinued operations as of September 30, 2010. During the quarter ended September 30, 2010, management determined that the potential market rents were not sufficient to cover prospective ground lease payments plus the costs to convert these properties to multi-tenant facilities. Therefore, we decided to permit the ownership of the Sherman, Texas property to revert back to the land owner as of November 1, 2010. We elected not to make ground rent payments on the Lafayette, Louisiana property and anticipate that the ground owner will exercise its remedies and take title to the property. We recorded a $704,000 impairment charge related to these investments which is included in discontinued operations for the year ended December 31, 2010.

The Knoxville, Tennessee location has also been classified as discontinued operations as of September 30, 2010. During the quarter ended September 30, 2010, management determined that after having exercised its purchase option under its ground lease and acquiring the land in October 2010 the best course of action was to pursue a sale of the real estate. As a result, we recorded a $626,000 impairment charge which is included in discontinued operations for the year ended December 31, 2010. On February 24, 2011 we entered into an agreement to sell this property subject to the buyer’s due diligence. We anticipate that the sale will be consummated during the second quarter of 2011.

With respect to Kroger’s purchase of the Athens, Georgia property, in accordance with a three party agreement between us, Kroger and the land owner, an appraisal process was conducted to determine the fair market value of the property. As a result of the finalization of the appraisal process we recorded an impairment charge of $1,390,000 during the year ended December 31, 2010.

51

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

Tenant Concentrations

Three tenants, who each represent more than 10% of rental revenues, contributed approximately 44%, 41% and 39% of our base rental revenues for the years ended December 31, 2010, 2009 and 2008, respectively, and represent approximately 43%, 24% and 24%, respectively, of the total rentable square footage of the operating property portfolio.

Off-Balance Sheet Investments

We have three off-balance sheet investments — our Marc Realty, Lex-Win Concord and Sealy investment platforms. For our three off-balance sheet arrangements, our exposure to loss is limited to our investment balance.

Critical Accounting Policies and Estimates

Impairment

Operating properties — We evaluate the need for an impairment loss on real estate assets when indicators of impairment are present and the projected undiscounted cash flows from an asset are not sufficient to recover an asset’s carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The projection of cash flows used in the impairment evaluation involves significant judgment by management.

Preferred equity investments — We have certain mezzanine loans which are classified as preferred equity investments. Determining whether a preferred equity investment is other-than-temporarily impaired requires significant judgment. This evaluation includes consideration of the length of time and extent to which the fair value of an investment has been less than its cost basis, our intent and ability to hold the investment until a forecasted recovery in value and the collateral underlying the investment.

Loan assets — Loan assets are periodically evaluated for possible impairment in order to determine whether it is necessary to establish a loan loss allowance. In some instances if a borrower is experiencing difficulties making loan payments we may assist the borrower to address the problems, which could include extending the loan term, making additional advances, or reducing required payments. A loan asset is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms of the loan. Impairment is then measured based on the present value of expected future cash flows or, if the loan is collateral dependent, the fair value of the collateral. When a loan is considered to be impaired, we will establish an allowance for loan losses and record a corresponding charge to earnings. Significant judgments are required in determining impairment. We do not record interest income on impaired loans. Any cash receipts on impaired loans are recorded as a recovery reducing the allowance for loan losses.

Equity investments — Equity investments are reviewed for impairment periodically. Equity investments for which the carrying value exceeds the fair value, the Trust evaluates if these are other-than-temporarily impaired.

Contingent liabilities — Estimates are used when accounting for the allowance for contingent liabilities and other commitments. Estimating probable losses requires analysis of multiple forecasts that often depend on judgments about potential actions by third parties such as regulators. All of the estimates and evaluations are susceptible to change and actual results could differ from the estimates and evaluations.

Variable Interest Entities

We have evaluated our investments to determine whether they are variable interests in a variable interest entity (“VIE”). A VIE is required to be consolidated by its primary beneficiary. The primary beneficiary is the party that incurs a majority of the VIE’s anticipated losses and/or a majority of its expected returns. Determination of whether we must consolidate variable interest entities requires significant judgments and assumptions to be made.

52

Net Leased Property — At December 31, 2010 we identified our wholly owned Andover, Massachusetts operating property as a VIE given that the net leased tenant has an option to purchase the building for a fixed price and the option is exercisable at the tenant’s discretion at any point during the lease term. We have the determined that we have the power to direct activities that most significantly impact the economics of the property and therefore are the primary beneficiary and consolidate this property.

Deer Valley Venture — We have concluded that WRT-DV LLC (“WRT-DV”), the entity that owns the Deer Valley property that we hold a 96.5% ownership interest 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. We have determined that we have the power to direct activities that most significantly impact the economics of the property and therefore are the primary beneficiary and consolidate this property.

Loans Receivable and Loan securities — At December 31, 2010 we identified certain loan assets as variable interests in VIEs because the equity investment at risk is not considered sufficient for the entity to finance its activities without additional subordinated financial support. However, we do not currently have the power to direct the activities of the ventures collateralizing any of its loans receivable. For this reason, we believe that we do not have the power to direct activities that most significantly impact the economics of the VIE and therefore are not the primary beneficiary of these ventures. We account for these investments under the guidance for loans receivable and real estate debt investments.

Concord and CDH CDO — At December 31, 2010 we have identified our Concord and CDH CDO equity investments (the “Concord Investments”) as variable interests in VIEs. The carrying value of our Concord Investments is zero and we do not have the current obligation to provide financial or other support to the Concord Investments and the obligations of the Concord Investments are non-recourse to us. In addition we do not have the power to direct activities that most significantly impact the economics of the VIE and therefore we have determined that we are not the primary beneficiary and we account for these investments under the equity method of accounting.

Marc Realty Investments — We have concluded that our 12 Marc Realty equity investments and our 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 we maintain 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 we are not the primary beneficiary of these Marc Realty investments.

Recently Issued Accounting Standards

See “ITEM 8. Financial Statements and Supplementary Data — Note 2.”

53

ITEM 7A — QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

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

Our liabilities include both fixed and variable rate debt. As discussed in ITEM 7 — Management’s Discussion and Analysis of Financial Conditions and Results of Operations, we seek to limit our risk to interest rate fluctuations through match financing on our loan assets as well as through hedging transactions. In this regard, we entered into the following agreement:

• Effective June 30, 2010, we entered into an interest rate swap agreement, with a notional amount of $20,000,000 and will expire June 30, 2011 which effectively converts the interest rate on that portion of principal from a floating rate of 1.75% to a fixed rate of 2.675%.

The fair value of our debt, based on discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt, was less than its carrying value by $22,042,000 and $25,704,000 at December 31, 2010 and 2009 respectively.

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

	Change in LIBOR(2)
	-0.26%			1%		2%		3%
Change in consolidated interest expense	$	(66	)	$	255	$	509	$	764
Pro-rata share of change in interest expense of debt on non-consolidated entities (1)		(20	)		77		237		423
(Increase) decrease in net income	$	(86	)	$	332	$	746	$	1,187

(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 December 31, 2010 was 0.26%.

We may utilize various financial instruments to mitigate the potential negative impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. In addition, as of December 31, 2010 our variable rate loans receivable with a face value aggregating $53,922,000 partially mitigate our exposure to change in interest rates.

Market Value Risk

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

54

ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	Page
Reports of Independent Registered Public Accounting Firm		56
Consolidated Balance Sheets as of December 31, 2010 and 2009		57
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2010, 2009 and 2008		58
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2010, 2009 and 2008		59
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008		61
Notes to Consolidated Financial Statements		63

55

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Winthrop Realty Trust:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Winthrop Realty Trust and its subsidiaries at December 31, 2010 and December 31, 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under ITEM 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits in 2010, 2009 and 2008. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 16, 2011

56

WINTHROP REALTY TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	December 31,
	2010			2009
ASSETS
Investments in real estate, at cost
Land	$	37,142		$	20,659
Buildings and improvements		271,357			228,419
		308,499			249,078
Less: accumulated depreciation		(36,232	)		(31,269	)
Investments in real estate, net		272,267			217,809
Cash and cash equivalents		45,257			66,493
Restricted cash held in escrows		8,593			9,505
Loans receivable, net		110,395			26,101
Accounts receivable, net of allowances of $262 and $565, respectively		12,402			14,559
Securities carried at fair value		33,032			52,394
Loan securities carried at fair value		11,981			1,661
Available for sale securities, net		—			203
Preferred equity investment		4,010			4,012
Equity investments		81,937			73,207
Lease intangibles, net		26,821			22,666
Deferred financing costs, net		1,158			1,495
Assets held for sale		2,275			3,087
TOTAL ASSETS	$	610,128		$	493,192
LIABILITIES
Mortgage loans payable	$	230,443		$	216,767
Series B-1 Cumulative Convertible Redeemable Preferred Shares, $25 per share liquidation preference; 852,000 shares authorized and outstanding at December 31, 2010 and December 31, 2009		21,300			21,300
Revolving line of credit		25,450			—
Accounts payable and accrued liabilities		12,557			7,401
Dividends payable		4,431			3,458
Deferred income		150			48
Below market lease intangibles, net		2,696			2,849
Liabilites of held for sale assets		33			—
TOTAL LIABILITIES		297,060			251,823
COMMITMENTS AND CONTINGENCIES
NON-CONTROLLING REDEEMABLE PREFERRED INTEREST
Series C Cumulative Convertible Redeemable Preferred Shares, $25 per share liquidation preference, 144,000 and 544,000 shares authorized and outstanding at December 31, 2010 and December 31, 2009, respectively		3,221			12,169
Total non-controlling redeemable preferred interest		3,221			12,169
EQUITY
Winthrop Realty Trust Shareholders’ Equity:
Common Shares, $1 par, unlimited shares authorized; 27,030,186 and 20,375,483 issued and outstanding at December 31, 2010 and December 31, 2009, respectively		27,030			20,375
Additional paid-in capital		569,586			498,118
Accumulated distributions in excess of net income		(300,782	)		(301,317	)
Accumulated other comprehensive loss		(63	)		(87	)
Total Winthrop Realty Trust Shareholders’ Equity		295,771			217,089
Non-controlling interests		14,076			12,111
Total Equity		309,847			229,200
TOTAL LIABILITIES AND EQUITY	$	610,128		$	493,192

See Notes to Consolidated Financial Statements.

57

WINTHROP REALTY TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

	Years Ended December 31,
	2010			2009			2008
Revenue
Rents and reimbursements	$	38,239		$	40,021		$	41,504
Interest, dividends and discount accretion		17,128			7,336			2,448
		55,367			47,357			43,952
Expenses
Property operating		8,674			7,042			6,767
Real estate taxes		2,542			2,542			2,428
Depreciation and amortization		10,008			10,585			11,572
Interest		15,375			16,664			21,963
Impairment loss on investment in real estate		—			10,000			2,100
Impairment loss on available for sale securities		—			—			207
Provision for loss on loans receivable		—			2,152			1,179
General and administrative		8,834			7,303			6,887
State and local taxes		134			157			329
		45,567			56,445			53,432
Other income (loss)
Earnings (loss) from preferred equity investments		338			(2,108	)		(1,645	)
Equity in loss of equity investments		(2,007	)		(103,092	)		(69,310	)
Gain on sale of available for sale securities		—			—			1,580
Gain on sale of mortgage-backed securities		—			—			454
Gain on sale of other assets		—			—			24
Realized gain on sale of securities carried at fair value		558			5,416			—
Unrealized gain on securities carried at fair value		5,060			17,862			24
Impairment loss on real estate loan available for sale		—			(203	)		—
Gain on extinguishment of debt		—			6,846			6,284
Realized gain on loan securities carried at fair value		469			—			—
Unrealized gain on loan securities carried at fair value		5,011			—			—
Interest income		139			172			1,670
Other income		—			—			499
		9,568			(75,107	)		(60,420	)
Income (loss) from continuing operations		19,368			(84,195	)		(69,900	)
Discontinued operations
Income (loss) from discontinued operations		(2,003	)		865			2,207
Consolidated net income (loss)		17,365			(83,330	)		(67,693	)
Income attributable to non-controlling interest		(888	)		(1,017	)		(483	)
Net income (loss) attributable to Winthrop Realty Trust		16,477			(84,347	)		(68,176	)
Income attributable to non-controlling redeemable preferred interest		(288	)		(147	)		—
Net income (loss) attributable to Common Shares	$	16,189		$	(84,494	)	$	(68,176	)
Comprehensive income (loss)
Consolidated net income (loss)	$	17,365		$	(83,330	)	$	(67,693	)
Change in unrealized gain on mortgage-backed securities		—			—			190
Change in unrealized gain on available for sale securities		2			19			1,662
Change in unrealized gain (loss) on interest rate derivative		22			543			(743	)
Change in unrealized gain (loss) from equity investments		—			26,174			(6,137	)
Less reclassification adjustment included in net income		—			—			(2,058	)
Comprehensive income (loss)	$	17,389		$	(56,594	)	$	(74,779	)
Per Common Share data — Basic
Income (loss) from continuing operations	$	0.81		$	(5.24	)	$	(4.74	)
Income (loss) from discontinued operations		(0.09	)		0.05			0.15
Net income (loss) attributable to Winthrop Realty Trust	$	0.72		$	(5.19	)	$	(4.59	)
Per Common Share data — Diluted
Income (loss) from continuing operations	$	0.81		$	(5.24	)	$	(4.74	)
Income (loss) from discontinued operations		(0.09	)		0.05			0.15
Net income (loss) attributable to Winthrop Realty Trust	$	0.72		$	(5.19	)	$	(4.59	)
Basic Weighted-Average Common Shares		22,566			16,277			14,866
Diluted Weighted-Average Common Shares		22,568			16,277			14,866

See Notes to Consolidated Financial Statements.

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WINTHROP REALTY TRUST

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008

(In thousands except per share data)

										Accumulated			Accumulated
	Common Shares						Additional			Distributions			Other			Non-
	of Beneficial Interest						Paid-In			in Excess of			Comprehensive			Controlling
	Shares			Amount			Capital			Net Income			Income			Interests			Total
Balance, December 31, 2007		13,258		$	66,292		$	358,145		$	(124,553	)	$	(8,090	)	$	9,978		$	301,772
Net loss attributable to Winthrop Realty Trust		—			—			—			(68,176	)		—			—			(68,176	)
Net income attributable to non-controlling interests		—			—			—			—			—			483			483
Distributions to non-controlling interests		—			—			—			—			—			(103	)		(103	)
Contributions from non-controlling interests		—			—			—			—			—			600			600
Dividends paid or accrued on Common Shares of beneficial interest ($1.35 per share)		—			—			—			(20,555	)		—			—			(20,555	)
Change in unrealized loss on available for sale securities, net of reclassification adjustments for amounts included in net income		—			—			—			—			58			—			58
Change in unrealized loss on mortgage backed securities held for sale		—			—			—			—			(264	)		—			(264	)
Change in unrealized gain on interest rate derivatives		—			—			—			—			(743	)		—			(743	)
Change in unrealized loss from equity investments		—			—			—			—			(6,137	)		—			(6,137	)
Effect of the Reverse Split		—			(63,298	)		63,298			—			—			—			—
Partial shares retired due to Reverse Split		(1	)		(5	)		(5	)		—			—			—			(10	)
Purchase and retirement of Common Shares		(70	)		(70	)		(860	)		—			—			—			(930	)
Conversion of Series B-1 Preferred Shares to Common Shares		548			2,742			9,190			—			—			—			11,932
Issuance of Common Shares through rights offering		1,769			8,845			28,029			—			—			—			36,874
Stock issued pursuant to dividend reinvestment plan		250			1,248			3,159			—			—			—			4,407
Balance, December 31, 2008		15,754			15,754			460,956			(213,284	)		(15,176	)		10,958			259,208
Cumulative effect, change in accounting principle		—			—			—			11,647			(11,647	)		—			—
Net loss attributable to Winthrop Realty Trust		—			—			—			(84,347	)		—			—			(84,347	)
Net income attributable to non-controlling interests		—			—			—			—			—			1,017			1,017
Distributions to non-controlling interests		—			—			—			—			—			(843	)		(843	)
Contributions from non-controlling interests		—			—			—			—			—			979			979
Dividends paid or accrued on Common Shares of beneficial interest ($0.9125 per share)		—			—			—			(15,186	)		—			—			(15,186	)
Dividends paid or accrued on Series C Preferred Shares ($0.406 per share)		—			—			—			(147	)		—			—			(147	)
Change in unrealized loss on available for sale securities, net of reclassification adjustments for amounts included in net income		—			—			—			—			19			—			19
Change in unrealized gain on interest rate derivatives		—			—			—			—			543			—			543
Change in unrealized loss from equity investments		—			—			—			—			26,174			—			26,174
Issuance of Common Shares through rights offering		4,451			4,451			35,717			—			—			—			40,168
Stock issued pursuant to dividend reinvestment plan		170			170			1,445			—			—			—			1,615
Balance, December 31, 2009		20,375			20,375			498,118			(301,317	)		(87	)		12,111			229,200

(Continued on next page)

See Notes to Consolidated Financial Statements.

59

WINTHROP REALTY TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(In thousands except per share data, continued)

							Accumulated			Accumulated
	Common Shares				Additional		Distributions			Other			Non-
	of Beneficial Interest				Paid-In		in Excess of			Comprehensive			Controlling
	Shares		Amount		Capital		Net Income			Income			Interests			Total
Balance, December 31, 2009		20,375	$	20,375	$	498,118	$	(301,317	)	$	(87	)	$	12,111		$	229,200
Net income attributable to Winthrop Realty Trust		—		—		—		16,477			—			—			16,477
Net income attributable to non-controlling interests		—		—		—		—			—			888			888
Distributions to non-controlling interests		—		—		—		—			—			(354	)		(354	)
Contributions from non-controlling interests		—		—		—		—			—			1,431			1,431
Dividends paid or accrued on Common Shares of beneficial interest ($0.65 per share)		—		—		—		(15,654	)		—			—			(15,654	)
Dividends paid or accrued on Series C Preferred Shares ($0.406 per share)		—		—		—		(288	)		—			—			(288	)
Change in unrealized loss on available for sale securities, net of reclassification adjustments for amounts included in net income		—		—		—		—			2			—			2
Change in unrealized gain on interest rate derivatives		—		—		—		—			22			—			22
Conversion of Series C Preferred Shares to Common Shares		714		714		8,234		—			—			—			8,948
Net proceeds from Common Shares offering		5,750		5,750		61,024		—			—			—			66,774
Stock issued pursuant to dividend reinvestment plan		191		191		2,210		—			—			—			2,401
Balance, December 31, 2010		27,030	$	27,030	$	569,586	$	(300,782	)	$	(63	)	$	14,076		$	309,847

See Notes to Consolidated Financial Statements.

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WINTHROP REALTY TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended December 31,
	2010			2009			2008
Cash flows from operating activities
Net income (loss)	$	17,365		$	(83,330	)	$	(67,693	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs)		6,988			7,504			8,072
Amortization of lease intangibles		3,033			4,771			5,507
Straight-lining of rental income		212			(1,280	)		(1,701	)
Loan discount accretion		(8,782	)		(1,021	)		—
(Earnings) loss of preferred equity investments		(338	)		2,758			2,805
Distributions of income from preferred equity investments		340			2,373			4,804
Loss of equity investments		2,007			103,092			69,310
Distributions of income from equity investments		5,270			2,784			6,878
Restricted cash held in escrows		1,167			(1,824	)		(318	)
Gain on sale of securities carried at fair value		(558	)		(5,416	)		—
Unrealized gain on securities carried at fair value		(5,060	)		(17,862	)		(24	)
Gain on sale of available for sale securities		—			—			(1,580	)
Gain on sale of mortgage backed securities held for sale		—			—			(454	)
Gain on sale of investments in real estate		—			—			(1,807	)
Gain on loan securities carried at fair value		(469	)		—			—
Unrealized gain on loan securities carried at fair value		(5,011	)		—			—
Impairment loss on real estate loan available for sale		—			203			—
Impairment loss on investments in real estate		2,720			10,000			2,307
Gain on extinguishment of debt		—			(7,138	)		(6,284	)
Provision for loss on loan receivable		—			2,152			1,179
Tenant leasing costs		(2,996	)		(2,191	)		795
Bad debt (recovery) expense		(643	)		340			62
Net change in interest receivable		(361	)		(74	)		(70	)
Net change in accounts receivable		2,363			—			—
Net change in accounts payable and accrued liabilities		2,365			(873	)		4,084
Net cash provided by operating activities		19,612			14,968			25,872
Cash flows from investing activities
Issuance and acquisition of loans receivable		(122,301	)		(31,514	)		(24,124	)
Investments in real estate		(23,484	)		(2,522	)		(3,901	)
Investment in equity investments		(25,632	)		(3,358	)		(14,093	)
Investment in preferred equity investment		—			(487	)		(4,973	)
Return of equity on equity investments		9,625			118			19,041
Investment in real estate loan available for sale		—			(35,000	)		—
Return of capital distribution from securities carried at fair value		181			—			—
Purchase of available for sale securities		—			—			(5,055	)
Purchase of securities carried at fair value		(13,222	)		(33,115	)		(36,896	)
Proceeds from sale of investment in real estate		1,750			—			—
Proceeds from preferred equity investments		—			145			21,273
Proceeds from sale of mortgage backed securities available for sale		—			—			78,318
Proceeds from sale of real estate loan available for sale		—			34,797			—
Proceeds from sale of securities carried at fair value		31,249			39,015			422
Proceeds from sale of available for sale securities		205			—			58,088
Proceeds of loan securities at maturity		2,272			—			—
Proceeds from sale of loans receivable		12,876			—			—
Restricted cash held in escrows		(1,508	)		2,668			(252	)
Collection of loans receivable		15,064			11,467			12,635
Cash from foreclosure on properties		275			—			—
Net cash provided by (used in) investing activities		(112,650	)		(17,786	)		100,483

(Continued on next page)

See Notes to Consolidated Financial Statements.

61

WINTHROP REALTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, continued)

	Years Ended December 31,
	2010			2009			2008
Cash flows from financing activities
Proceeds from mortgage loans payable	$	—		$	49		$	875
Proceeds from loan payable		—			19,818			—
Payment of loan payable		—			(19,818	)		—
Proceeds from revolving line of credit		25,450			35,000			70,000
Payment of revolving line of credit		—			(35,000	)		(70,000	)
Principal payments of mortgage loans payable		(10,199	)		(6,229	)		(8,063	)
Restricted cash held in escrows		1,520			4,004			(5,127	)
Payments of note payable		—			(9,800	)		—
Deferred financing costs		(252	)		(61	)		(392	)
Contribution from non-controlling interest		1,431			979			600
Distribution to non-controlling interest		(354	)		(843	)		(103	)
Issuance of Common Shares under Dividend Reinvestment Plan		2,401			1,615			4,407
Issuance of Common Shares through offering		66,774			40,168			36,874
Dividend paid on Common Shares		(14,573	)		(17,809	)		(30,863	)
Dividend paid on Series C Preferred Shares		(396	)		—			—
Redemption of Series B-1 Preferred Shares		—			(2,000	)		(18,583	)
Repayment of borrowings under repurchase agreement		—			—			(75,175	)
Deposit on Series B-1 Preferred Shares		—			—			(17,081	)
Proceeds from note payable		—			—			9,800
Purchase of retirement of Common Shares		—			—			(930	)
Redemption of Common Shares through reverse split		—			—			(10	)
Net cash provided by (used in) financing activities		71,802			10,073			(103,771	)
Net increase (decrease) in cash and cash equivalents		(21,236	)		7,255			22,584
Cash and cash equivalents at beginning of period		66,493			59,238			36,654
Cash and cash equivalents at end of period	$	45,257		$	66,493		$	59,238
Supplemental Disclosure of Cash Flow Information
Interest paid	$	14,240		$	16,324		$	25,167
Taxes paid	$	133		$	220		$	189
Supplemental Disclosure on Non-Cash Investing and Financing Activities
Dividends accrued on Common Shares	$	4,392		$	3,311		$	5,934
Dividends accrued on Series C Preferred Shares	$	39		$	147			—
Capital expenditures accrued	$	1,046		$	201		$	358
Distribution from equity investment	$	—		$	161		$	—
Conversion of Series B-1 Preferred Shares into Common Shares	$	—		$	—		$	12,339
Redemption of Series B-1 Preferred Shares	$	—		$	(17,081	)	$	—
Deposit on redemption of Series B-1 Preferred Shares	$	—		$	17,081		$	—
Transfer of preferred equity investments to equity method investments	$	—		$	(41,823	)	$	—
Transfer of loans to equity method investments	$	—		$	(15,805	)	$	—
Transfer to equity method investments from loans and preferred equity investments	$	—		$	57,628		$	—
Transfer from loan assets to investments in real estate and lease intangibles	$	19,210		$	—		$	—
Transfer to investments in lease intangibles	$	3,204		$	—		$	—
Transfer to investments in real estate	$	41,425		$	—		$	—
Transfer to below market lease intangibles	$	125		$	—		$	—
Assumption of mortgage loan on investment in real estate	$	23,875		$	—		$	—

See Notes to Consolidated Financial Statements.

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WINTHROP REALTY TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts related to number of buildings, square footage and tenant data are unaudited.

1. Business

Winthrop Realty Trust (“WRT”), a real estate investment trust (“REIT”) under Sections 856-860 of the Internal Revenue Code (the “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 1, 2005, WRT has conducted its business through WRT Realty L.P., a Delaware limited partnership (the “Operating Partnership”). WRT 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 WRT 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 collateralized directly or indirectly by commercial real property (“loan assets”), including collateral mortgage-backed securities and collateral debt obligation securities; and (iii) equity and debt interests in other real estate investment trusts (“REIT securities”).

2. Summary of Significant Accounting Policies

Consolidation and Basis of Presentation

The consolidated financial statements represent the consolidated results of WRT, its wholly-owned taxable REIT subsidiary, WRT-TRS Management Corp. (“TRS”), and the Operating Partnership. TRS’ sole asset is a 0.2% ownership interest in 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.

Reverse Stock Split

In November 2008 WRT effected a 1-for-5 reverse stock split (the “Reverse Split”) of its Common Shares of Beneficial Interest (“Common Shares”) pursuant to which five Common Shares issued and outstanding as of the close of the market on November 28, 2008 were automatically combined into one Common Share, subject to the elimination of fractional shares. All references to Common Shares outstanding, per Common Share amounts and stock option data have been restated to reflect the effect of the Reverse Split for all periods presented.

Reclassifications

Certain prior year balances have been reclassified in order to conform to the current year presentation. Discontinued operations for the periods presented include the Trust’s properties in Biloxi, Mississippi; Athens, Georgia; Kansas City, Kansas; Lafayette, Louisiana; Sherman, Texas; and Knoxville, Tennessee.

Out of Period Adjustments

During the quarter ended June 30, 2010, the Trust identified an error in its year ended December 31, 2009 allocation of fair value attributable to the building component of its Athens, Georgia property which was assessed for impairment in connection with its reclassification as held for sale and its presentation in discontinued operations. As a result, net loss was understated by approximately $700,000 for the year ended December 31, 2009. The Trust determined that this amount was not material to the years ended December 31, 2010 or 2009, or to the three and six months ended June 30, 2010. As such, a charge of approximately $700,000 has been recorded in the consolidated statement of operations within discontinued operations as an out of period adjustment in the second quarter of 2010. There was no impact on cash flow from operations.

During the quarter ended December 31, 2010, the Trust identified an error related to the capitalization of certain legal costs in its year ended December 31, 2009 financial statements. As a result, net loss was understated by approximately $228,000 for the year ended December 31, 2009. The Trust determined that this amount was not material to the year or any quarter for the years ended December 31, 2010 or 2009. As such, a charge of $228,000 has been recorded in the consolidated statement of operations as an out of period adjustment for the year ended December 31, 2010. There was no impact on cash flow from operations.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions in determining the values of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenue and expenses during the reporting period. The estimates that are particularly susceptible to management’s judgment include but are not limited to the impairment of real estate, loans and investments in ventures and real estate securities at fair value. In addition, estimates are used in accounting for the allowance for doubtful accounts. All of the estimates and evaluations are susceptible to change and actual results could differ from the estimates and evaluations.

Investments in Real Estate

Real estate assets are stated at historical cost. Expenditures for repairs and maintenance are expensed as incurred. Significant renovations that extend the useful life of the properties are capitalized. Depreciation for financial reporting purposes is computed using the straight-line method. Buildings are depreciated over their estimated useful lives of 40 years, based on the property’s age, overall physical condition, type of construction materials and intended use. Improvements to the buildings are depreciated over the shorter of the estimated useful life of the improvement or the remaining useful life of the building at the time the improvement is completed. Tenant improvements are depreciated over the shorter of the estimated useful life of the improvement or the term of the lease of the tenant.

Upon the acquisition of real estate, the Trust assesses the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above and below market leases and acquired in-place leases and tenant relationships) and acquired liabilities and the Trust allocates purchase price based on these assessments. The Trust assesses fair value based on estimated cash flow projections and utilizes appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

Real estate investments and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated from the use and eventual disposition of the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized equal to the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell. The assets and liabilities are classified separately as held for sale in the consolidated balance sheet and are no longer depreciated.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments purchased with maturities of three months or less. The Trust maintains cash and cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions.

Restricted Cash

Restricted cash in escrow accounts and deposits securing a loan payable include cash reserves for tenant improvements, leasing commissions, real estate taxes and other expenses pursuant to the loan agreements.

64

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans Receivable

The Trust’s policy is to record loans receivable at cost, net of unamortized discount unless such loan receivable is deemed to be impaired. Discounts on loans receivable are amortized over the life of the loan receivable using the effective interest method based upon an evaluation of prospective future cash flows. The amortization is reflected as an adjustment to interest income. Other costs incurred in connection with acquiring loans, such as marketing and administrative costs, are charged to expense as incurred.

The Trust evaluates the collectability of the interest and principal of each of its loans to determine impairment. A loan receivable is considered to be impaired when, based on current information and events, it is probable that the Trust will be unable to collect all amounts due according to the existing contractual terms of the loan receivable. Impairment is then measured based on the present value of expected future cash flows or the fair value of the collateral. When a loan receivable is considered to be impaired, the Trust will record a loan loss allowance and a corresponding charge to earnings. Significant judgments are required in determining impairment. The Trust does not record interest income on impaired loans receivable. Any cash receipts on impaired loans receivable are recorded as a recovery reducing the allowance for loan losses. The Trust charges uncollectible loans against its allowance for loan losses after it has exhausted all economicaly warranted legal rights and remedies to collect the receivables or upon successful foreclosure and taking of loan collateral.

Certain real estate operating properties are acquired through foreclosure or through deed-in-lieu of foreclosure in full or partial satisfaction of non-performing loans that the Trust intends to hold, operate or develop for a period of at least twelve months. These assets are initially recorded at their estimated fair value. If there is any excess of the loan carrying value over the fair value of the property acquired, a charge is recorded to loan losses when title to the property is obtained. Additionally, upon acquisition of a property, tangible and intangible assets and liabilities acquired are recorded at their estimated fair values and depreciation is computed in the same manners as described in “Investments in Real Estate” above.

Accounts Receivable

Accounts receivable are recorded at the contractual amount and do not bear interest. The allowance for doubtful accounts is the Trust’s best estimate of the amount of probable credit losses in existing accounts receivable. The Trust reviews the allowance for doubtful accounts monthly. Past due balances are reviewed individually for collectability. Account balances are charged off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote.

Securities and Loan Securities at Fair Value

The Trust elected to adopt a one-time option to apply fair value treatment on its existing financial assets and liabilities on January 1, 2008. For all new financial instruments, the Trust has the option to elect fair value for these financial assets or liabilities. The Trust elected the fair value option for certain real estate securities to mitigate a divergence between accounting and economic exposure for these assets. These securities are recorded on the consolidated balance sheets as securities carried at fair value. The changes in the fair value of these instruments are recorded in unrealized gain (loss) on investments and other in the Consolidated Statements of Operations and Comprehensive Income.

Preferred Equity Investment

The Trust invests in certain mezzanine loans in which the Trust also holds an ownership interest in the borrower that allows the Trust to participate in a percentage of the proceeds from a sale or refinancing of the underlying property. At the inception of each such investment, management must determine whether such investment should be accounted for as a loan, preferred equity, as a venture or as real estate. The Trust classifies these mezzanine loans as preferred equity investments and they are accounted for using the equity method because the Trust has the ability to significantly influence, but not control, the entity’s operating and financial policies. Earnings for each investment are recognized in accordance with each respective investment agreement and where applicable, based upon an allocation of the investment’s net assets at adjusted book value as if the investment was hypothetically liquidated at the end of each reporting period.

At each reporting period the Trust assesses whether there are any indicators or declines in the fair value of preferred equity investments. An investment’s value is impaired only if the Trust’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.

65

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equity Investments

The Trust accounts for its investments in companies in which it has the ability to significantly influence but does not have a controlling interest, by using the equity method of accounting. Factors that are considered in determining whether or not the Trust exercises control include (i) the right to remove the general partner or managing member in situations where the Trust is the general partner or managing member, and (ii) substantive participating rights of equity holders in significant business decisions including dispositions and acquisitions of assets, financing, operations and capital budgets, and other contractual rights. Under the equity method, the investment, originally recorded at cost, is adjusted to recognize the Trust’s share of net earnings or losses as they occur and for additional contributions made or distributions received. To recognize the character of distributions from equity investments, the Trust looks as the nature of the cash distribution to determine the proper character of cash flow distributions as either returns on investment, which would be included in operating activities, or returns of investment, which would be included in investing activities.

At each reporting period the Trust assesses whether there are any indicators or declines in the fair value of the equity investments. An investment’s value is impaired only if the Trust’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment.

Lease Intangibles

The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, building and improvements and fixtures and equipment based on management’s determination of the relative fair values of these assets. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods, current market conditions and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rental revenue during the expected lease-up periods based on current market demand. Management also estimates costs to execute similar leases including leasing commissions.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market, below-market and in-place lease values are recorded based on the difference between the current in-place lease rent and a management estimate of current market rents. Below-market lease intangibles are recorded as a liability and amortized into rental revenue over the non-cancelable periods of the respective leases. Above-market leases are recorded as part of intangible assets and amortized as a direct charge against rental revenue over the non-cancelable portion of the respective leases.

Deferred Financing Costs

Direct financing costs are deferred and amortized on a straight-lined basis over the terms of the related agreements as a component of interest expense on a basis which approximates the effective interest method.

Financial Instruments

Financial instruments held by the Trust include cash and cash equivalents, restricted cash, real estate securities available for sale, loans receivable, interest rate swap agreements, accounts receivable, revolving line of credit, accounts payable and long term debt. Cash and cash equivalents, restricted cash, real estate securities available for sale and interest rate swap agreements are recorded at fair value. The fair value of accounts receivable and accounts payable approximate their current carrying amounts.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivative Financial Instruments

The Trust’s interest rate swap agreement is carried on the balance sheet at its fair value, as an asset if the counterparty would be required to pay the Trust, or as a liability if the Trust would be required to pay the counterparty to settle the swap. Since the Trust’s derivative is designated as “cash flow hedge,” the change in the fair value of such derivative is recorded in other comprehensive income or loss for hedges that qualify as effective and the change in the fair value is transferred from other comprehensive income or loss to earnings as the hedged item affects earnings. The ineffective amount of the interest rate swap agreement, if any, is recognized in earnings. The effective portion of the change in fair value is recorded through other comprehensive income.

Upon entering into hedging transactions, the Trust documents the relationship between the interest rate swap agreements and the hedged item. The Trust also documents its risk management policies, including objectives and strategies, as they relate to its hedging activities. Both at inception of a hedge and on an on-going basis, the Trust assesses whether or not the hedge is highly “effective” in achieving offsetting changes in cash flow attributable to the hedged item. The Trust discontinues hedge accounting on a prospective basis with changes in the estimated fair value reflected in earnings when: (i) it is determined that the derivative is no longer effective in offsetting cash flows of a hedged item (including forecasted transactions); (ii) it is no longer probable that the forecasted transaction will occur; or (iii) it is determined that designating the derivative as a hedge or not is no longer appropriate. To date, the Trust has not discontinued hedge accounting for its interest rate swap agreements. The Trust utilizes its interest rate swap agreement to manage interest rate risk and does not intend to enter into derivative transactions for speculative or trading purposes.

Revenue Recognition

The Trust accounts for its leases with tenants as operating leases with rental revenue recognized on a straight-line basis. The straight-line rent adjustment decreased revenue by $212,000 in 2010, and increased revenue by $1,280,000 in 2009 and $1,701,000 in 2008. The accrued straight-line rent receivable amounts at December 31, 2010 and 2009 were $8,729,000 and $8,941,000, net of allowances, respectively.

Rental income may also include payments received in connection with lease termination agreements. In addition, leases typically provide for reimbursement to the Trust of common area maintenance costs, real estate taxes and other operating expenses. Operating expense reimbursements are recognized as earned.

Pursuant to the terms of the lease agreements with respect to net lease properties, the tenant at each property is required to pay all costs associated with the property including property taxes, ground rent, maintenance costs and insurance. These costs are not reflected in the consolidated financial statements.

Tenant leases that are not net leases generally provide for (i) billings of fixed minimum rental and (ii) billings of certain operating costs. The Trust accrues the recovery of operating costs based on actual costs incurred.

The Trust recognizes lease termination payments as a component of rental revenue in the period received, provided there are no further Trust obligations under the lease; otherwise, the lease termination payment is amortized on a straight-line basis over the remaining obligation period.

Income Taxes

The Trust operates in a manner intended to enable it to continue to qualify as a REIT. In order to qualify as a REIT, the Trust is generally required each year to distribute to its shareholders at least 90% of its taxable income (excluding any net capital gains). There is also a separate requirement to distribute net capital gains or pay a corporate level tax. The Trust intends to comply with the foregoing minimum distribution requirements.

In order for the Trust to continue to qualify as a REIT, the value of the TRS stock cannot exceed 20% of the value of the Trust’s total assets. The net income of TRS is taxable at regular corporate tax rates. Current income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with deferred income taxes being provided for temporary differences between the carrying values of assets and liabilities for financial reporting purposes and such values as determined by income tax laws. Changes in deferred income taxes attributable to these temporary differences are included in the determination of income. The Trust and TRS do not file consolidated tax returns.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Trust reviews its tax positions under accounting guidance which require that a tax position may only be recognized in the financial statements if it is more likely than not that the tax position will prevail if challenged by tax authorities. The Trust believes it is more likely than not that its tax positions will be sustained in any tax examination. The Trust has no income tax expense, deferred tax assets or deferred tax liabilities associated with any such uncertain tax positions for the operations of any entity included in the Consolidated Statement of Operations and Comprehensive Income.

Earnings Per Share

The Trust determines basic earnings per share on the weighted average number of 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 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):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2010			2009			2008
Basic
Income (loss) from continuing operations	$	19,368		$	(84,195	)	$	(69,900	)
Income attributable to non-controlling interest		(888	)		(1,017	)		(483	)
Preferred dividend of Series C Preferred Shares		(288	)		(147	)		—
Income (loss) from continuing operations applicable to Common Shares		18,192			(85,359	)		(70,383	)
Income (loss) from discontinued operations		(2,003	)		865			2,207
Net income (loss) applicable to Common Shares for earnings per share purposes	$	16,189		$	(84,494	)	$	(68,176	)
Basic weighted-average Common Shares		22,566			16,277			14,866
Income (loss) from continuing operations	$	0.81		$	(5.24	)	$	(4.74	)
Income (loss) from discontinued operations		(0.09	)		0.05			0.15
Net income (loss) per Common Share	$	0.72		$	(5.19	)	$	(4.59	)
Diluted
Income (loss) from continuing operations	$	19,368		$	(84,195	)	$	(69,900	)
Income attributable to non-controlling interest		(888	)		(1,017	)		(483	)
Preferred dividend of Series C Preferred Shares		(288	)		(147	)		—
Income (loss) from continuing operations applicable to Common Shares		18,192			(85,359	)		(70,383	)
Income (loss) from discontinued operations		(2,003	)		865			2,207
Net income (loss) applicable to Common Shares for earnings per share purposes	$	16,189		$	(84,494	)	$	(68,176	)
Basic weighted-average Common Shares		22,566			16,277			14,866
Series B-1 Preferred Shares (1)		—			—			—
Series C Preferred Shares (2)		—			—			—
Stock options (3)		2			—			—
Diluted weighted-average Common Shares		22,568			16,277			14,866
Income (loss) from continuing operations	$	0.81		$	(5.24	)	$	(4.74	)
Income (loss) from discontinued operations		(0.09	)		0.05			0.15
Net income (loss) per Common Share	$	0.72		$	(5.19	)	$	(4.59	)

(1)	The Series B-1 Preferred Shares are anti-dilutive for the years ended December 31, 2010, 2009 and 2008 and are not included in the weighted-average shares outstanding for the calculation of diluted earnings per Common Share.
(2)	The Series C Preferred Shares were issued November 1, 2009, are anti-dilutive for the years ended December 31, 2010 and 2009 and are not included in the weighted-average shares outstanding for the calculation of diluted earnings per Common Share.
(3)	The Trust’s stock options were dilutive for the year ended December 31, 2010. The stock options were anti-dilutive for the years ended December 31, 2009 and 2008 and are not included in the weighted-average shares outstanding for the calculation of diluted earnings per Common Share.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards

In July 2010 an amendment was issued to the accounting and disclosure requirements which outlines specific disclosures that will be required for the allowance for credit losses and all finance receivables. Finance receivables include loans, lease receivables and other arrangements with a contractual right to receive money on demand or on fixed or determinable dates. The new guidance will require companies to provide detailed disclosures by portfolio segment and class to enable users of the financial statement to understand the nature of credit risk, how the risk is analyzed in determining the related allowance for credit losses and changes to the allowance during the reporting period. Certain disclosures as of the end of the reporting period required under these provisions will be effective for the Trust’s December 31, 2010 annual reporting period. Additional disclosure rules about activity that occurs during a reporting period will be effective for the Trust’s March 31, 2011 interim reporting period. The Trust has adopted this standard which did not have a material impact on its consolidated financial statements.

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

3. Fair Value Measurements

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).

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

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

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recurring Measurements

Cash, Cash Equivalents and Restricted Cash Held in Escrows

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

Available for Sale Securities

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.

Securities Carried at Fair Value

Securities carried at fair value are classified within Level 1 of the fair value hierarchy.

Loan Securities Carried at Fair Value

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

Derivative Financial Instruments

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

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

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

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs
Recurring Basis	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Cash and cash equivalents	$	45,257	$	—	$	—	$	45,257
Restricted cash held in escrow		8,593		—		—		8,593
Securities carried at fair value		33,032		—		—		33,032
Loan securities carried at fair value		—		—		11,981		11,981
	$	86,882	$	—	$	11,981	$	98,863
Liabilities
Derivative liabilities	$	—	$	63	$	—	$	63

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

	Quoted Prices in
	Active Markets		Significant Other		Significant
	for Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs
Recurring Basis	(Level 1)		(Level 2)		(Level 3)		Total
Assets
Cash and cash equivalents	$	66,493	$	—	$	—	$	66,493
Restricted cash held in escrow		9,505		—		—		9,505
Available for sale securities		203		—		—		203
Securities carried at fair value		51,702		—		692		52,394
Loan securities carried at fair value		—		—		1,661		1,661
	$	127,903	$	—	$	2,353	$	130,256
Liabilities
Derivative liabilities	$	—	$	85	$	—	$	85

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below includes a roll forward of the balance sheet amounts from January 1, 2009 to December 31, 2010, including the change in fair value, for financial instruments classified by the Trust within Level 3 of the valuation hierarchy. When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement.

				Loan Securities
	Securities Carried			Carried at Fair
Year Ended Ended December 31, 2010	at Fair Value			Value
(in thousands)
Fair value, January 1, 2009	$	—		$	—
Purchases		692			1,661
Transfers in/and or out of Level 3		—			—
Fair value, January 1, 2010		692			1,661
Purchases		—			7,112
Sale Repayment		(692	)		(2,272	)
Realized Gain					469
Unrealized gain, net		—			5,011
Transfers in/and or out of Level 3		—			—
Fair value, December 31, 2010	$	—		$	11,981

Non-Recurring Measurements

Impaired Loans

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

Equity and Preferred Equity Investments

Equity and preferred equity investments are assessed for other-than-temporary impairment. The determination of fair value of preferred equity and equity investments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each asset as well as the income capitalization approach considering prevailing market capitalization rates. The Trust reviews each investment based on the highest and best use of the investment and market participation assumptions. The significant assumptions used in this analysis include the discount rate used in the income capitalization valuation. The Trust has determined that the significant inputs used to value its equity investment in Lex-Win Concord LLC fall within Level 3. The Trust recognized impairment losses of $31,670,000 and $36,543,000 on this asset during the years ended December 31, 2009 and 2008, respectively.

The Trust has determined that the significant inputs used to value certain of its equity method and preferred equity investments fall within Level 3. The Trust recorded impairment losses of $2,186,000 and $7,513,000 on these preferred equity investments during the years ended December 31, 2009 and 2008, respectively. Due to the restructuring of the Trust’s investment in the Marc Realty properties, these preferred equity investments were reclassified as equity investments as of July 1, 2009. The Trust recognized an impairment loss of $2,500,000 on one of its Marc Realty equity investments during the period ended December 31, 2009. All of the Trust’s remaining equity investments are carried at cost which is equal to or lower than their current fair value at December 31, 2010.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments in Real Estate and Assets Held For Sale

During 2010, 2009, and 2008 the Trust recognized impairment charges of $2,720,000, $10,000,000 and $2,100,000, respectively, relative to investments in real estate and assets held for sale. The Trust assessed the assets within its portfolio for recoverability based upon its estimate of undiscounted future cash flows expected to result from use and disposition of the assets. For those assets not deemed recoverable, the Trust determines the fair value of those assets using an income capitalization approach based upon assumptions it believes a market participant would utilize. The Trust records impairment charges equal to the difference between its carrying value and the estimated fair value of the asset.

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

	Quoted Prices in
	Active Markets for		Significant Other		Significant
	Identical Assets and		Observable Inputs		Unobservable
Non-Recurring Basis	Liabilities (Level 1)		(Level 2)		Inputs (Level 3)		Total
Equity investments	$	—	$	—	$	—	$	—
Assets held for sale		—		—		2,209		2,209
Investments in real estate		—		—		—		—
	$	—	$	—	$	2,209	$	2,209

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

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

Fair Value Option

The current accounting guidance for fair value measurement provides a fair value option election that allows companies to irrevocably elect fair value as the measurement attribute for certain financial assets and liabilities. Changes in fair value for assets and liabilities for which the election is made 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.

The Trust recognized a net unrealized gain of $10,071,000, $17,862,000, and $24,000 for the years ended December 31, 2010, 2009, and 2008 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 statements of operations. Income related to securities carried at fair value is recorded as interest and dividend income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents as of December 31, 2010 and December 31, 2009 the Trust’s financial assets for which the fair value option was elected (in thousands):

Financial Instruments at Fair Value	December 31, 2010		December 31, 2009
Assets
Securities carried at fair value:
REIT Debentures	$	—	$	18,794
REIT Preferred shares		28,547		23,950
REIT Common shares		4,485		9,650
Loan securities carried at fair value		11,981		1,661
	$	45,013	$	54,055

The table below presents as of December 31, 2010 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 Due
	December 31, 2010		Upon Maturity		Difference
Assets
Loan securities carried at fair value	$	11,981	$	25,241	$	13,260
	$	11,981	$	25,241	$	13,260

4. Acquisition, Disposition, Leasing and Financing Activities

Operating Properties

Leasing Activity

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

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

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

Net Lease Retail Portfolio — In October 2010 The Kroger Company extended the leases on 255,000 square feet in five buildings, exercised their purchase option on a 52,000 square foot building in Athens, Georgia and vacated five buildings containing 229,000 square feet.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquisitions

On November 22, 2010 the Trust exercised its option and acquired the land underlying the Plantation, Florida property leased to BellSouth Telecommunication, Inc. for a purchase price of $4,000,000.

On November 1, 2010 the Trust acquired the land underlying six of the Trust’s net lease retail properties previously held in land estates. The acquisition of the six land parcels was consummated at an aggregate purchase price of approximately $4,209,000.

On December 20, 2010 the Trust exercised its option and acquired the land underlying the Andover, Massachusetts property for a purchase price of $1,200,000.

Crossroads I at Meridian — Englewood, Colorado — On December 22, 2010 the Trust acquired for $8,700,000 an 118,000 square foot, class A office building located at 9800 Mount Pyramid Court, Englewood, Colorado known as Crossroads I at Meridian, which is adjacent to the Crossroads II property the Trust acquired through foreclosure in November 2010.

During 2010 the Trust converted its ownership in three loan receivable assets acquired in 2010 to operating properties through foreclosure. See details for Crossroads II, Deer Valley Medical Center, and Newbury Village Apartments below.

The Trust accounted for its four property acquisitions using the acquisition method of accounting. The methodology used by the Trust for purposes of allocating the purchase price to tangible and intangible assets and liabilities acquired is discussed in Note 2. The purchase price is allocated as follows (in thousands):

	Carrying
	Value
Land	$	8,098
Buildings and improvements		40,768
Lease intangibles		4,965
Below market lease intangibles		(527	)
Total	$	53,304

Intangible assets acquired and intangible liabilities assumed consist of the following (in thousands):

				Weighted
				Average
	Carrying			Amortization
	Value			Period (years)
Lease intangible assets:
Above market tenant leases acquired	$	414			7.4
In-place lease value		1,668			3.3
Tenant relationship value		2,547			10.7
Leasing commissions		336			3.5
Total	$	4,965			7.46
Intangible liabilities:
Below market tenant leases assumed	$	(527	)		4.13

The Trust also assumed a mortgage loan payable of $23,875,000 in connection with the acquisition of one property.

The operating results of the acquired properties are included in the Trust’s results of operations from the acquisition dates and are presented below (in thousands):

Rents and reimbursements	$	831
Total expenses (including depreciation, amortization and interest)		(1,841	)
Net loss	$	(1,010	)

The unaudited pro forma information below summarizes the Trust’s combined results of operations for the years ended December 31, 2010 and 2009 as though the acquisitions were completed on January 1, 2009. The pro forma operating data is not necessarily indicative of what the actual results of operations would have been assuming the transactions had been completed as set forth above, nor do they purport to represent the Trust’s results of operations for future periods (amounts in thousands, except per share data).

	December 31,		December 31,
	2010		2009
	(unaudited)		(unaudited)
Pro forma revenues	$	60,263	$	53,336
Pro forma income (loss) from continuing operations	$	17,346	$	(87,904	)
Pro forma net income (loss) attributable to Common Shares	$	15,055	$	(87,186	)
Income (loss) per Common Share from continuing operations:
Basic — as reported	$	0.84	$	(5.24	)
Basic — as pro forma	$	0.76	$	(5.40	)
Diluted — as reported	$	0.84	$	(5.24	)
Diluted — as pro forma	$	0.76	$	(5.40	)

Other

River City, Chicago, Illinois — On July 25, 2010, the River City property experienced flooding in its basement level and the parking garage due to the Chicago River overflowing the seawall protecting the property. The flooding caused substantial damage to the property’s mechanical and electrical systems resulting in the tenants in the commercial space being without power for several days. The property’s insurance carrier was immediately notified. The Trust has accrued approximately $225,000 to cover the costs associated with the damage and a claim is in process.

Loans Receivable

Siete Square, Phoenix, Arizona — On February 5, 2010, the Trust restructured its Siete Square loan into a $3,000,000 Sub-Participation A interest which bears interest at 8% and a $4,219,000 Sub-Participation B interest. The Trust sold the Sub-Participation A interest at par to Concord Real Estate CDO 2006-1, Ltd. (“CDO-1”) on the same date.

Driver Building, San Diego, California — On May 14, 2010 the Trust acquired at par a non-performing $6,540,000 first mortgage loan. The loan was collateralized by an 80,300 square foot office building referred to as the Robert F. Driver Building located in San Diego, California. This loan bore interest at 7.47% and matured on March 1, 2010. On August 27, 2010, the Trust received $6,540,000 in full repayment of the Note.

Crossroads II at Meridian, Englewood Colorado — On June 11, 2010 the Trust acquired for $8,100,000 a $10,031,000 non-performing first mortgage loan collateralized by an 118,000 square foot, class A office building located at 9780 Mount Pyramid Court, Englewood Colorado, known as Crossroads II at Meridian. On November 17, 2010 the Trust foreclosed on the first mortgage loan and acquired the property.

Deer Valley Medical Center, Deer Valley, Arizona — On June 28, 2010 the Trust acquired for $10,257,000 a $20,491,000 non-performing first mortgage loan collateralized by an 86,000 square foot, class A medical office building known as the Deer Valley Professional Center. On August 6, 2010 the Trust foreclosed on the first mortgage loan and acquired the property.

1701 E. Woodfield Road, Schaumburg, Illinois — First Mortgage Loan — On July 1, 2010 the Trust acquired for $8,200,000 a $10,408,000 performing first mortgage loan collateralized by a 174,400 square foot office building located at 1701 E. Woodfield Road, Schaumburg, Illinois, a suburb of Chicago. The property is currently owned in a joint venture with Marc Realty. Simultaneously with the acquisition of this loan, the venture made a principal payment on the loan of $3,200,000 (50% of which was contributed by each of the Trust and Marc Realty) and the loan was modified to reduce the principal balance to $5,000,000 bearing interest at 8% per annum. On September 28, 2010 the borrower repaid the Trust’s outstanding $5,000,000 balance of the loan and all accrued interest from proceeds of a new first mortgage loan.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

500-512 Seventh Avenue, New York, New York — B Note — On July 9, 2010 the Trust acquired for $19,825,000 a $23,499,000 performing B note in a first mortgage loan which is subordinate to a $253,673,000 A note in the mortgage loan. The A and B note are collateralized by a 1,188,000 square foot office building located at 500-512 Seventh Avenue, New York, New York. The B note bears interest at 7.19% and matures on July 11, 2016. On August 4, 2010, the Trust sold a 50% pari passu participation interest in the B note (the “B-2 Participation”) for a purchase price of $9,859,000 which represented one-half of the purchase price paid for the B note less one-half of any principal payments received prior to the sale of the B-2 Participation.

San Marbeya Apartments, Tempe, Arizona-First Mortgage Loan — On July 23, 2010 the Trust acquired for $26,990,000 a $31,106,000 performing first mortgage loan. The loan is collateralized by a 276 unit apartment complex referred to as San Marbeya Apartments located in Tempe, Arizona. The loan has a blended interest rate of 5.88% and matures on January 1, 2015. On January 14, 2011, the Trust restructured this loan into 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 sold the senior participation to CDO-1 at par.

Rockwell — Shirley, New York — Mezzanine Loan — On August 31, 2010 the Trust acquired from Concord for $235,000 a $1,497,000 performing mezzanine loan. The loan is collateralized by a 129,660 square foot industrial/warehouse complex in Shirley, New York. The loan is subordinate to $17,045,000 of senior debt, bears interest at a rate of 12% and matures on May 1, 2016.

Newbury Apartments — Meriden, Connecticut — On September 2, 2010 the Trust acquired from Concord for $550,000 a non-performing mezzanine loan with a face amount of $3,500,000, which was collateralized by a 180 unit multi-family apartment complex located in Meriden, Connecticut. The loan was subordinate to a non-performing first mortgage loan with a principal balance of approximately $23,875,000. On October 29, 2010, the Trust foreclosed on the equity interests in the property owner resulting in the Trust becoming the indirect owner of the property subject to the first mortgage loan.

In February 2011 the Trust reached an agreement with the first mortgage lender 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.

Legacy Orchard —Corporate Loan — On October 22, 2010, the Trust acquired for $9,750,000 an existing $39,000,000 performing loan made to a private real estate equity fund and then modified the loan to provide for: (i) an interest rate of 15% on the $9,750,000 investment amount; (ii) collateral in the form of a $3,000,000 million letter of credit, a first mortgage on land and a security interest in other assets; (iii) a scheduled maturity date of October 31, 2014 and, (iv) subject to the satisfaction of certain conditions by the borrower a discounted payoff option after one year of $9,750,000.

Westwood Business Park — Phoenix, Arizona — Whole Loan — On October 29, 2010 the Trust acquired for $4,100,000, a first mortgage loan secured by an interest in four class B office buildings, containing 91,100 square feet of office space in Phoenix, Arizona. Upon acquisition of the loan, the borrower made a principal payment of $600,000 and the loan was restructured to reduce the then outstanding principal to $3,500,000 and to provide for a future funding component which allows the borrower to draw up to $400,000 to fund 50% of the tenant improvement and leasing commission costs on new leases. The loan bears interest at 11% and has a scheduled maturity date of October 31, 2011.

Moffett Towers — Sunnyvale California — B Note — On October 29, 2010 the Trust acquired at par a $21,428,000 senior participation in a B note secured by a first mortgage lien on a 951,000 square foot, recently constructed class A office complex located in Sunnyvale, California. The loan bears interest at Libor plus 6.48% (with a Libor floor of 1.5%) and has a scheduled maturity date of January 31, 2012.

Loan Securities

Scripps Center — Costa Mesa, California — Rake Bonds — On July 16, 2010 the Trust acquired from Concord for $1,200,000 two rake bonds with an aggregate face amount of $2,273,000. The rake bonds were subordinate to $17,715,000 of senior debt all of which was collateralized by a 229,000 square foot office complex referred to as the Scripps Center located in Costa Mesa, California. The bonds had an interest at rates ranging from Libor plus 1.39% to Libor plus 1.59%. The bonds matured and were repaid by the borrower at their face value on December 1, 2010.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Metropolitan Tower — New York, New York — Rake Bonds — On December 30, 2010, pursuant to a purchase option the Trust acquired from CDO-1 for $5,250,000 two rake bonds with an aggregate face amount of approximately $8,748,000, a weighted average interest rate of Libor plus 1.30% and have a scheduled maturity date of November 1, 2011. The rake bonds are secured by the 260,000 square feet of office space constituting the office portion of Metropolitan Tower located in New York, New York. On December 30, 2010 in connection with the acquisition of the Metropolitan Tower rake bonds, CDFT borrowed $3,498,000 from the Trust in the form of an unsecured loan. The loan bears interest at 12% and matures on December 30, 2015.

Concord CDO — CDO Bonds — On November 15, 2010 the Trust acquired from a third party for $662,000, tranche E bonds with a face amount of $9,000,000 issued by CDO-1. The bonds bear interest at Libor plus 1.20% and have a scheduled maturity date of December 25, 2046. In February 2011, the Trust sold these bonds to CDFT, a wholly owned subsidiary of CDH CDO and the equity owner of CDO-1, in exchange for a note in the amount of the Trust’s original purchase price plus accrued interest.

Investments in Joint Ventures

Riverside Shopping Center, Riverside, California — On June 28, 2010 the Trust formed a 50%-50% joint venture entity with a third party which acquired at par a 12% $15,600,000 B participation in a performing $70,000,000 first mortgage loan. The first mortgage loan is collateralized by a 405,000 square foot retail center located in Riverside, California and matures on December 1, 2012. The B participation is subordinate to $54,400,000 A participation.

Deer Valley Medical Center, Deer Valley, Arizona — On July 21, 2010, prior to the Deer Valley loan foreclosure, the Trust admitted an unrelated third party as a non-controlling member in the entity which holds the Deer Valley assets, in exchange for a capital contribution of $157,000. Pursuant to the terms of the operating agreement, the Trust receives a priority return on $7,900,000 of the Trust’s invested capital, with the balance of the capital being allocated 96.5% to the Trust and 3.5% to the joint venture partner.

Peter Cooper Village/Stuyvesant Town (“PCVST”) Investment, New York, New York — On August 6, 2010 the Trust and affiliates of Pershing Square Capital Management, L.P. (“Pershing Square”) formed a joint venture, PSW NYC LLC (“PSW NYC”), for which the Trust made an initial capital contribution of $10,125,000. Concurrent with its formation, PSW NYC, which was owned 22.5% by the Trust and 77.5% by Pershing Square, acquired 100% of the $300,000,000 face amount of certain Mezzanine Loans (the “Mezz Loans”) for a purchase price of $45,000,000. The Mezz Loans were indirectly collateralized by PCVST, an 11,227 unit apartment complex in New York City. The Mezz loans represented the senior-most mezzanine loan interests in the property and along with the $3,000,000,000 first mortgage loan secured by the property, were currently in default.

PSW NYC initiated foreclosure on the equity interests in the property’s owner. On September 16, 2010, a lawsuit was initiated by the first mortgage lenders against PSW NYC and on its equity interests, the New York State Supreme Court injoined PSW NYC from foreclosing. PSW NYC appealed the decision to the Appellate Division of the New York Supreme Court. The Appellate Division denied PSW NYC’s request that the first mortgage lender be stayed from foreclosing on the property pending the appeal. On October 27, 2010, PSW NYC and the first mortgage lender agreed to settle the dispute and PSW NYC sold its interest in the Mezz Loans to an affiliate of the first mortgage lender for $45,000,000 and the litigation was voluntarily dismissed.

Financing

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

KeyBank Mortgage Loan Payable Extension — In April 2010, the Trust exercised its one-year option to extend the loan with KeyBank collateralized by 11 properties (the “KeyBank loan”) through June 2011.

Revolving Line of Credit — In December 2010, the Trust exercised its option to extend the term of the revolving credit line to December 16, 2011.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Public Offering

On September 27, 2010 the Trust closed a public offering of 5,750,000 Common Shares at a price of $12.25 per share before underwriter discounts and received net proceeds of approximately $67,000,000.

Conversion of Preferred Shares

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

5. Loans Receivable

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

							Contractual
		Stated	Carrying Amount				Maturity
Description	Location	Interest Rate	2010		2009		Date
Beverly Hilton (1)	Beverly Hills, CA	Libor + 1.74%	$	7,899	$	5,384	Aug-11
Westwood (1)	Phoeniz, AZ	11.00%		3,500		—	Oct-11
Metropolitan Tower (1)	New York, NY	Libor + 1.51%		10,312		6,638	Nov-11
Moffett Towers (1)	Sunnyvale, CA	Libor + 6.48%		21,752		—	Jan-12
Siete Square	Phoeniz, AZ	10.37% (2)		2,488		5,505	Jun-12
160 Spear	San Francisco, CA	9.75% (3)		6,674		4,281	Jun-12
160 Spear	San Francisco, CA	15.00%		3,029		1,212	Jun-12
Legacy Orchard (1)	Various	15.00%		9,750		—	Oct-14
San Marbeya (1)	Tempe, AZ	5.88%		26,966		—	Jan-15
CDH CDO LLC (1)	n/a	12.00%		3,498		—	Dec-15
Rockwell	Shirley, NY	12.00%		255		—	May-16
500-512 7th Ave	New York, NY	7.19%		9,954		—	Jul-16
180 N. Michigan (1)	Chicago, IL	8.50% (4)		1,862		717	Dec-16
Wellington Tower (1)	New York, NY	6.79%		2,456		2,364	Jul-17
			$	110,395	$	26,101

(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 December 31, 2010) at a rate of 9.8375% per annum less (ii) interest payable on the outstanding principal balance of the A participation ($3,000 at December 31, 2010) 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 December 31, 2010) at a rate of 6.48215% per annum less (ii) interest payable on the outstanding principal balance of the A note ($35,000 at December 31, 2010) at a rate of 9.75% per annum. As a result, the effective yield on the Trust’s $3,410 cash investment is 40.8%.
(4)	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 $558,000 and $197,000 at December 31, 2010 and December 31, 2009, respectively, and cumulative accretion of $9,803,000 and $1,021,000 at December 31, 2010 and December 31, 2009, respectively. For the years ended December 31, 2010 and 2009, the Trust recorded discount accretion into interest income of $8,782,000 and $1,021,000 respectively. No discount accretion was recognized in 2008. The fair value of the Trust’s loans receivable, exclusive of interest receivables was approximately $114,477,000 at December 31, 2010.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Trust’s interest and dividend income for the years ended December 31, 2010, 2009 and 2008:

	2010		2009		2008
Interest and Dividends Detail:
Interest on loan assets	$	5,691	$	2,421	$	1,532
Accretion of loan discount		8,782		1,021		—
Interest and dividends on REIT securities		2,655		3,894		916
Total Interest and Dividends	$	17,128	$	7,336	$	2,448

Three loans, each of which represents more than 10% of interest income, contributed approximately 74% of interest income of the Trust for the year ended December 31, 2010. Two loans, each of which represents more than 10% of interest income, contributed approximately 70% of interest income of the Trust for the year ended December 31, 2009.

Credit Quality of Loans Receivable and Loan Losses

The 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 December 31, 2010 (in thousands, except for number of loans).

			Carring Value
	Number of		of Loans
Internal Credit Quality	Loans (1)		Receivable
Greater than zero		8	$	50,361
Equal to zero		5		56,536
Less than zero		—		—
		13	$	106,897

(1) The Trust holds one unsecured loan at December 31, 2010 not included above that has a carrying amount of $3,498. The Trust anticipates repayment in the first quarter of 2011.

There was no provision for loan loss recorded during the year ended December 31, 2010. During the years ended December 31, 2009 and 2008, the Trust recorded a provision for loan loss of $2,152,000 and $1,179,000 related to loans in the Marc Realty portfolio. In addition, during the year ended December 31, 2009, the Trust wrote off loans totaling $4,597,000 of which $3,331,000 related to the Marc Realty properties and $1,226,000 of which was related to the Vision term loan.

Non Performing Loans

The 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 December 31, 2010 and 2009 there were no non-performing loans and no past due payments. For the years ended December 31, 2010, 2009, and 2008 the Trust did not recognize any interest income on impaired loans subsequent to the date of their impairment.

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WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Activity related to loans receivable is as follows (in thousands):

	2010			2009
Balance at January 1	$	26,101		$	22,876
Purchase and advances		122,301			31,514
Proceeds from sale		(12,876	)		—
Interest (received) accrued, net		361			74
Repayments		(15,064	)		(11,467	)
Provision for loan loss allowance		—			(2,152	)
Loan accretion		8,782			1,021
Reclass to investment in real estate		(19,210	)		—
Reclass from other assets		—			40
Reclass to equity investments		—			(15,805	)
Balance at December 31	$	110,395		$	26,101

In addition to our initial purchase price of certain loans, we have future funding requirements. At December 31, 2010, we had future funding requirements pursuant to three loans receivable totaling approximately $6,031,000.

6. Securities Carried at Fair Value

Securities carried at fair value are summarized in the table below (in thousands):

	2010				2009
	Cost		Fair Value		Cost		Fair Value
REIT Debentures	$	—	$	—	$	13,597	$	18,794
REIT Preferred shares		15,757		28,547		14,231		23,950
REIT Common shares		3,590		4,485		8,234		9,650
		19,347		33,032		36,062		52,394
Loan securities		7,574		11,981		1,661		1,661
	$	26,921	$	45,013	$	37,723	$	54,055

During the years ended December 31, 2010, 2009 and 2008, 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 $33,726,000, $39,015,000 and $58,509,000, respectively. The gross realized gains on these sales and payoffs totaled approximately $1,027,000, $5,416,000 and $1,580,000 in 2010, 2009 and 2008, respectively. For purpose of determining gross realized gains, the cost of securities is based on specific identification.

For the years ended December 31, 2010, 2009 and 2008, the Trust recognized net unrealized gains on available for sale securities, securities carried at fair value and loan securities carried at fair value of $10,071,000, $17,862,000, and $24,000 respectively, as the result of the change in fair value of the financial assets for which the fair value option was elected.

7. Preferred Equity Investments — Marc Realty

The Trust recognized earnings from preferred equity investments of $338,000 for the year ended December 31, 2010. The Trust recognized losses from preferred equity investments of $2,108,000 and $1,645,000 for the years ended December 31, 2009 and 2008 which included impairment losses of $4,850,000 and $7,512,000 in 2009 and 2008, respectively. These results reflect the effects of the restructuring of the preferred equity investment with Marc Realty in July 2009. Effective with the third quarter of 2009, 12 of the investments with Marc Realty were deemed to be equity investments for which the Trust began recognizing its pro-rata share of income or loss subsequent to June 30, 2009. Prior to June 30, 2009, the Trust accounted for these 12 investments as preferred equity investments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. Equity Investments

The Trust’s equity investments consist of the following at December 31, 2010 and December 31, 2009 (in thousands):

		Nominal % Ownership
		at December 31,	December 31,		December 31,
Venture Partner (1)	Equity Investment	2010	2010		2009
Marc Realty (2)	8 South Michigan LLC	50.0%	$	7,087	$	6,859
Marc Realty (2)	11 East Adams Street LLC	49.0%		3,223		2,963
Marc Realty (2)	29 East Madison Street LLC	50.0%		7,720		7,750
Marc Realty (2)	Michigan 30 LLC	50.0%		12,080		11,881
Marc Realty (2)	Brooks Building LLC	50.0%		7,452		7,346
Marc Realty (2)	High Point Plaza LLC	50.0%		6,275		5,986
Marc Realty (2)	Salt Creek LLC	50.0%		2,344		1,536
Marc Realty (2)	1701 Woodfield LLC	50.0%		4,221		1,582
Marc Realty (2)	River Road LLC	50.0%		4,123		4,075
Marc Realty (2)	3701 Algonquin Road LLC	50.0%		2,931		2,827
Marc Realty (2)	Enterprise Center LLC	50.0%		3,018		3,094
Marc Realty (2)	900 Ridgebrook LLC	50.0%		1,676		1,661
Sealy	Northwest Atlanta Partners LP	60.0%		2,479		3,189
Sealy	Newmarket GP LLC	68.0%		6,647		7,840
Sealy	Airpark Nashville GP	50.0%		2,778		4,618
Lexington (2) (3)	Lex-Win Concord LLC	—		—		—
Inland/Lexington (2) (3)	Concord Debt Holdings LLC	33.3%		—		—
Inland/Lexington (2) (3)	CDH CDO LLC	33.3%		—		—
ROIC	WRT-ROIC Riverside LLC	50.0%		7,883		—
Pershing Square	PSW NYC LLC	22.5%		—		—
			$	81,937	$	73,207

(1)	The Trust has various venture partners. Further detail is provided for the equity investments under their respective headings below.
(2)	The Trust has determined that all of the equity investments, other than those with Sealy and ROIC are VIEs. The Trust has determined that it is not the primary beneficiary of these investments.
(3)	The Lex-Win entity has been dissolved and the assets previously held through Lex-Win are now separated and held through Concord and CDH CDO.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table reflects the activity of the Trust’s equity investments for the years ended December 31, 2010 and 2009 (in thousands):

	Marc						Concord			WRT-						Lex-Win
	Realty			Sealy			Investments (1)			ROIC			PSW NYC			Acquisition			Total
Balance at December 31, 2008	$	—		$	19,046		$	73,061		$	—		$	—		$	95		$	92,202
Transfers from preferred equity		41,823			—			—			—			—			—			41,823
Transfer of loans receivable		15,805			—			—			—			—			—			15,805
Other comprehensive income reclassification		—			—			4,695			—			—			—			4,695
Equity in other comprehensive income		—			—			21,479			—			—			—			21,479
Contributions		3,240			—			118			—			—			—			3,358
Distributions		(1,089	)		(1,195	)		(500	)		—			—			—			(2,784	)
Non-cash distribution		—			—			(161	)		—			—			—			(161	)
Return of capital		—			—			(118	)		—			—			—			(118	)
Equity in loss		(2,219	)		(2,204	)		(98,574	)		—			—			(95	)		(103,092	)
Balance at December 31, 2009		57,560			15,647			—			—			—			—			73,207
Contributions		6,961			—			—			7,800			10,871			—			25,632
Equity in income (loss)		1,776			(3,010	)		—			473			(1,246	)		—			(2,007	)
Distributions		(4,147	)		(733	)		—			(390	)		—			—			(5,270	)
Return of capital		—			—			—			—			(9,625	)		—			(9,625	)
Balance at December 31, 2010	$	62,150		$	11,904		$	—		$	7,883		$	—		$	—		$	81,937

(1) Includes equity investments in Lex-Win Concord, Concord Debt Holdings LLC and CDH CDO LLC (the Trust’s “Concord Investments”).

Marc Realty

On July 1, 2009, the Trust restructured certain of its existing investments with Marc Realty and, as a result of the restructure, reclassified 12 investments from preferred equity investments to equity investments. In addition, any tenant improvement and capital expenditure loans to these properties were reclassified from loans receivable to equity investments. As a result, effective with the third quarter of 2009, the Trust recognizes its pro-rata share of income or loss on 12 separate equity investments.

The Trust recorded net income of $1,776,000 from the 12 equity investments for the year ended December 31, 2010 and a net loss of $2,219,000, inclusive of a $2,500,000 other-than-temporary impairment loss on one of the equity investments, for the period from July 1, 2009 through December 31, 2009. Additionally, the Trust received cash distributions of $4,147,000 and $1,089,000 from the investments during the years ended December 31, 2010 and 2009.

The Marc Realty properties are encumbered with $86,236,000 of mortgage debt currently with $19,290,000 maturing in 2011, $10,375,000 maturing in 2012 and the remainder in 2013 or later. The Trust is currently negotiating with the lender to extend the total debt maturing in 2011.

The suburban Chicago office properties portion of the Trust’s joint ventures with Marc Realty continue to experience net positive lease up. However, due to continued weakness in the suburban Chicago office market, the Trust performed an impairment assessment of its suburban Chicago joint ventures with Marc Realty and has determined that the fair value of its investments in these ventures each marginally exceed their carrying values. While the 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.

83

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	December 31,			December 31,
	2010			2009
ASSETS
Real estate, net	$	171,961		$	174,310
Cash and cash equivalents		1,633			1,100
Receivables and other assets		27,194			25,287
Total Assets	$	200,788		$	200,697
LIABILITIES AND MEMBERS’ CAPITAL
Mortgage and notes payable	$	86,236		$	94,969
Other liabilities		12,557			12,722
Members’ Capital		101,995			93,006
Total Liabilities and Members’ Capital	$	200,788		$	200,697
Trust’s share of equity	$	51,376		$	46,497
Basis differentials (1)		13,274			13,563
Other-than-temporary impairment		(2,500	)		(2,500	)
Carrying value of the Trust’s investments in the equity investments	$	62,150		$	57,560

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

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

				For the Period
	For the Year Ended			July 1 to
	December 31, 2010			December 31, 2009
Total revenue	$	40,088		$	20,179
Expenses
Operating		18,522			9,279
Interest		4,685			2,284
Real estate taxes		4,880			2,847
Depreciation and amortization		9,820			4,740
Other expense		306			175
Total expenses		38,213			19,325
Other income
Gain from extinguishment of debt		2,207			—
Other Income		59			—
Total Other Income		2,266			—
Net income	$	4,141		$	854
Trust’s share of net income	$	2,065		$	425
Amortization of basis differential		(289	)		(144	)
Other-than-temporary impairment		—			(2,500	)
Income from equity investments	$	1,776		$	(2,219	)

84

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sealy Northwest Atlanta

On December 12, 2006, the Trust acquired, through a venture with Sealy, a 60% non-controlling ownership interest in 12 flex properties in Atlanta, Georgia containing an aggregate of 472,000 square feet of space for approximately $35,845,000. The Trust invested approximately $5,470,000 and the general partner, an affiliate of Sealy, invested approximately $3,647,000 for their 40% interest in the venture. The venture obtained a first mortgage loan of $28,750,000 bearing interest at 5.7% and maturing in January 2012. The Trust accounts for this investment on the equity basis and recorded equity in loss of approximately $710,000, $457,000 and $409,000 for the years ended December 31, 2010, 2009 and 2008, respectively. The Trust received no distributions in 2010 and received distributions of $135,000 in the year ended December 31, 2009.

In October 2010, the venture elected to stop making debt service payments and the loan has been placed into special servicing. The venture is attempting to negotiate with the special servicer a restructuring of the debt which may include a discounted payoff.

In addition, the venture continues to aggressively market available space at the property for lease. Given the current circumstances, the Trust performed an impairment analysis with respect to its investment in this venture using assumptions it believes reflect those that would be used by a market participant. The Trust has determined that the fair value of its investment exceeds its carrying value and is not impaired at December 31, 2010. However, given that leasing efforts and negotiation for the restructuring or discounted repayment of the debt are ongoing, the ultimate outcome is uncertain and could cause impairment of the Trust’s investment that could be material.

Sealy Airpark Nashville

On April 17, 2007, the Trust acquired, through a venture with Sealy, a 50% non-controlling ownership interest in 13 light distribution and service center properties in Nashville, Tennessee. The purchase price of $87,200,000 was financed through approximately $65,383,000 of proceeds, net of escrows and closing costs; from a $74,000,000 5.77% first mortgage loan maturing in May 2012 and a $3,600,000 bridge loan from Sealy. Both Sealy and the Trust contributed $9,308,000 for a 50% ownership in the venture. The Trust accounts for this investment on the equity basis and recorded equity in loss of approximately $1,107,000, $1,056,000 and $1,023,000 for the years ended December 31, 2010, 2009 and 2008, respectively. The Trust received distributions of $733,000 and $836,000 in the years ended December 31, 2010 and 2009, respectively.

Sealy Newmarket

On August 20, 2008, the Trust acquired, through a venture with Sealy, a 68% non-controlling ownership interest in a six building office-flex campus containing approximately 470,000 square feet in Atlanta, Georgia. The purchase price for the property was $47,000,000 including assumed debt. The venture assumed an existing $37,000,000, 6.12% first mortgage loan encumbering the property, maturing in November 2016. The Trust contributed approximately $9,006,000 for its ownership in the venture. The Trust accounts for this investment on the equity basis and recorded equity in loss of approximately $1,193,000, $691,000 and $250,000 for the years ended December 31, 2010, 2009 and 2008, respectively. The Trust received no distributions in 2010 and received distributions of $224,000 in the year ended December 31, 2009.

In November 2010, the venture elected to stop making debt service payments and the loan has been placed into special servicing. The venture is attempting to negotiate with the special servicer a restructuring of the debt. In addition, the venture continues to aggressively market available space at the property for lease. Given the current circumstances, the Trust performed an impairment analysis with respect to its investment in this venture using assumptions it believes reflect those that would be used by a market participant. The Trust has determined that the fair value of its investment exceeds its carrying value and is not impaired at December 31, 2010. However, given that leasing efforts and negotiation for the restructuring or discounted repayment of the debt are ongoing, the ultimate outcome is uncertain and could cause impairment of the Trust’s investment that could be material.

85

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	December 31, 2010		December 31, 2009
ASSETS
Real estate, net	$	149,207	$	153,565
Cash and cash equivalents		960		971
Receivables and other assets		12,902		14,658
Total Assets	$	163,069	$	169,194
LIABILITIES AND MEMBERS’ CAPITAL
Mortgage and notes payable	$	139,750	$	139,750
Other liabilities		3,868		3,373
Members’ Capital		19,451		26,071
Total Liabilities and Members’ Capital	$	163,069	$	169,194
Carrying value of the Trust’s investments in the equity investments	$	11,904	$	15,647

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

	For the Years Ended			For the Years Ended			For the Years Ended
	December 31, 2010			December 31, 2009			December 31, 2008
Total revenue	$	16,253		$	17,246		$	15,568
Expenses
Operating		4,439			3,765			3,550
Real estate taxes		1,750			1,758			1,601
Interest		8,442			8,345			6,851
Depreciation and amortization		6,691			7,110			6,546
Other expenses		82			157			115
Total expenses		21,404			21,135			18,663
Net loss	$	(5,151	)	$	(3,889	)	$	(3,095	)
Trust’s share of net loss	$	(3,010	)	$	(2,204	)	$	(1,682	)

WRT-ROIC Riverside

On June 28, 2010 the Trust entered into a 50%-50% joint venture which purchased the Riverside Plaza loan. At December 31, 2010, this loan was performing according to its terms.

Peter Cooper Village/Stuyvesant Town

On August 6, 2010, the Trust entered into a joint venture, with affiliates of Pershing Square, PSW NYC. (See discussion in Note 4). During the year ended December 31, 2010, the Trust made aggregate capital contributions of $10,871,000, received a return of capital distribution of $9,625,000 and recorded a loss of $1,246,000.

Lex-Win Concord LLC (“Lex-Win”) and Concord Reorganization

On August 26, 2010 the Trust finalized a settlement agreement which triggered simultaneous transactions that changed the organizational structure, economics, and governance of the Trust’s equity investment in Lex-Win and Lex-Win’s wholly owned subsidiary Concord. The settlement agreement was implemented to resolve a legal action against Concord filed in May 2009 by a wholly-owned subsidiary of Inland American Real Estate Trust, Inc. (“Inland”), a member in Concord.

86

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As a result of the reorganization, Lex-Win was dissolved and transferred 100% of its interest in Concord to its members, the Trust and Lexington Realty Trust (“Lexington”). The underlying business assets of the former Lex-Win were separated into two distinct legal investment entities with identical ownership structures which are the reorganized Concord and a newly formed entity, CDH CDO LLC (“CDH CDO”). The Trust now holds 33.3% common member interests in each joint venture together with Lexington, and Inland.

Terms of the reorganization included a subsidiary of Concord selling 100% of the stock of Concord Debt Funding Trust (“CDFT”) to the newly formed CDH CDO for $9,500,000. The consideration was funded by Inland’s initial capital contribution to CDH CDO and was used by the subsidiary to partially repay its lenders.

There was no financial statement impact to the Trust as a result of the reorganization since the investment has been written down to zero as of June 30, 2009, when the Trust recognized an impairment loss of $31,670,000. The Trust has made no additional contributions and it has not recognized any additional income or loss as a result of the reorganization. In addition, Concord remains in violation of certain debt covenants to its lenders at December 31, 2010. Concord’s debt is non-recourse to the Trust and Concord’s lenders’ sole recourse with respect to defaults is limited to the value of Concord’s assets.

The December 31, 2009 balance sheet represents the consolidated balance sheet for Lex-Win.

The summarized combined balance sheets are as follows (in thousands):

	December 31, 2009
ASSETS
Cash and restricted cash	$	26,116
Real estate debt investments, net of loss allowance		447,270
Real estate debt investments held for sale		66,311
Available for sale securities, net		83,977
Other assets		10,834
Total assets	$	634,508
LIABILITIES AND MEMBERS’ CAPITAL
Repurchase agreements	$	135,064
Revolving credit facility		58,850
Note payable to related party		—
Collateralized debt obligations		347,525
Collateral support obligation		9,757
Sub-participation obligation		4,500
Accounts payable and other liabilities		14,198
Non-controlling redeemable preferred interest		5,720
Members’ capital		113,928
Accumulated other comprehensive loss		(55,148	)
Non-controlling interest		114
Total Liabilities and Members’ Capital	$	634,508
Trust’s share of equity	$	29,390
Basis differential (1)		(29,390	)
Carrying value of the Trust’s investment	$	—

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

87

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Results of operations for the years ended December 31, 2009 and 2008 represent consolidated results for Lex-Win.

Results of operations are summarized below (in thousands):

	Year Ended			Year Ended
	December 31,			December 31,
	2009			2008
Condensed Consolidated Statement of Operations
Interest and other income	$	38,948		$	71,307
Interest expense		(17,335	)		(36,410	)
Impairment loss on available for sale securities, net		(16,302	)		(73,832	)
Provision for loss allowance on real estate debt investments		(80,620	)		(31,053	)
Impairment loss on real estate debt investments held for sale		(101,027	)		—
Net realized loss on sale of investments		(32,246	)		—
Interest income on bank deposits		7			426
Gain on extinguishment of debt		—			15,603
Collateral support expense		(9,757	)		—
General and administrative		(5,712	)		(4,824	)
Loss from discontinued operations		(959	)		—
Consolidated net loss		(225,003	)		(58,783	)
Loss (income) attributable to non-controlling redeemable preferred interest		68,709			(1,619	)
Income attributable to non-controlling interest		(12	)		(12	)
Net loss attributable to Lex-Win	$	(156,306	)	$	(60,414	)
Trust’s share of net loss		(78,153	)		(30,207	)
Suspended loss		11,249			—
Other-than-temporary impairment		(31,670	)		(36,543	)
Loss from equity investment	$	(98,574	)	$	(66,750	)

The Trust has determined that as of December 31, 2009 and 2008 Lex-Win Concord met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X. The separate financial statements of Lex-Win Concord required pursuant to Rule 3-09 of Regulation S-X are filed as Exhibit 99.1 to the Trust’s Annual Report on Form 10-K.

The Trust has suspended losses of $54,663,000 to offset against future equity income from Concord at December 31, 2010.

88

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Debt

Mortgage Loans Payable

The Trust had outstanding mortgage loans payable of $230,443,000 and $216,767,000 at December 31, 2010 and 2009, respectively. The mortgage loan payments of principal and interest are generally due monthly, quarterly or semi-annually and are collateralized by applicable real estate of the Trust.

The Trust’s mortgage loans payable at December 31, 2010 and 2009 are summarized as follows (in thousands):

				Balance at		Balance at
Location of		Spread Over	Interest Rate at	December 31,		December 31,
Collateral	Maturity	LIBOR/Prime	December 31, 2010	2010		2009
Andover, MA	Mar 2011	—	6.60%	$	6,135	$	6,266
S. Burlington, VT	Mar 2011	—	6.60%		2,629		2,686
Various (1)	Jun 2011	LIBOR+1.75%	(2)		19,002		23,761
Meriden, CT	Feb 2012		5.83%		23,875		—
Chicago, IL	Apr 2012	—	6.00%		9,100		9,300
Amherst, NY	Oct 2013	—	5.65%		16,116		16,526
Indianapolis, IN	Apr 2015	—	5.82%		4,245		4,317
Chicago, IL	Mar 2016	—	5.75%		20,828		21,118
Houston, TX	Apr 2016	—	6.34%		60,351		63,869
Lisle, IL	Jun 2016	—	6.26%		23,905		24,176
Lisle, IL	Mar 2017	—	5.55%		5,600		5,600
Orlando, FL	Jul 2017	—	6.40%		38,657		39,148
				$	230,443	$	216,767

(1)	The KeyBank loan is collateralized by 11 properties.
(2)	Effective June 30, 2010, the Trust entered into an interest rate swap agreement in the notional amount of $20,000,000, effectively converting the floating interest rate to a fixed rate of 2.675% through June 30, 2011.

The following table summarizes future principal repayments as of December 31, 2010 (in thousands):

Year	Amount
2011	$	33,547
2012		38,940
2013		21,534
2014		6,922
2015		11,400
Thereafter		118,100
	$	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 $22,042,000 and $25,704,000 at December 31, 2010 and 2009 respectively.

See Note 23, Subsequent Events for discussion on refinancings.

89

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. Revolving Line of Credit

The Trust has a line of credit pursuant to which the Trust can borrow on a revolving basis up to $35,000,000. The Trust exercised its option to extend the term of the revolving credit line to December 16, 2011. Amounts borrowed under the credit facility bear interest at LIBOR plus 3.0%. To the extent the Trust maintains cash balances at KeyBank in excess of a certain threshold, the interest rate is reduced to LIBOR plus 2.25%.

The revolving line of credit requires the Trust to maintain (i) a minimum consolidated debt service coverage ratio, (ii) a maximum leverage ratio, (iii) liquid assets of $17,500,000 and (iv) a minimum net worth. Additionally, the Trust is limited to payment of dividends not to exceed 100% of adjusted earnings on a trailing 12-month basis, as defined, except to the extent necessary to maintain its tax status as a REIT. The revolving credit line is 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.

The outstanding balance under the facility was $25,450,000 at December 31, 2010. At December 31, 2009, there were no amounts outstanding under the facility. The Trust is required to pay a commitment fee on the unused portion of the line, which amounted to approximately $56,000 and $83,000 for the years ended December 31, 2010 and 2009 respectively.

The Trust is in compliance of its financial covenants under its revolving line of credit as of December 31, 2010. See Note 23, Subsequent Events for information on the modification to the revolving line of credit.

11. Derivative Financial Instruments

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

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

The effective portion of changes in fair value of the interest rate swap designated and that qualifies as a cash flow hedge is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the years ended December 31, 2010 and 2009, the interest rate swap was used to hedge the variable cash flows associated with existing variable-rate debt. The Trust also assesses and documents, both at the hedging instruments inception and on an ongoing basis, whether the derivative instrument is highly effective in achieving offsetting changes in the cash flows attributable to the hedged item. The Trust has recorded changes in fair value related to the effective portion of its interest rate swap contracts designated and qualifying as cash flow hedges totaling $22,000 and $681,000 of other comprehensive loss for the years ended December 31, 2010 and 2009, respectively, as a component of comprehensive income.

In connection with the KeyBank Loan extension, the Trust was required to provide interest rate protection through the maturity of the extension (June 30, 2011). The Trust obtained an interest rate swap with a $20,000,000 notional amount that will effectively convert the interest on the KeyBank Loan from a floating rate of Libor plus 1.75% to a fixed rate of 2.675%.

90

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

														Change in Swap
									Estimated Fair			Unrealized Gain		Valuations
									Value of Swap			on Settled Swap		Included in Other
				Notional			Cost		in Other			in Other		Comprehensive Income
	Swap			Amount			of		Comprehensive			Comprehensive		For the Year Ended
Maturity	Rate			of Hedge			Hedge		Income			Income		December 31, 2010
June 2011		0.925	%	$	20,000	(1)	$	—	$	(63	)	$	—	$	(63	)
June 2010		1.05	%		23,000			—		—			—		85

The table below presents information about the Trust’s interest rate swap at December 31, 2009 (dollars in thousands):

														Change in Swap
									Estimated Fair			Unrealized Gain		Valuations
									Value of Swap			on Settled Swap		Included in Other
				Notional			Cost		in Other			in Other		Comprehensive Income
	Swap			Amount			of		Comprehensive			Comprehensive		For the Year Ended
Maturity	Rate			of Hedge			Hedge		Income			Income		December 31, 2009
December 2009		4.05	%	$	26,000	(1)	$	—	$	—		$	—	$	627
June 2010		1.05	%		23,000	(1)		—		(85	)		—		(85	)

(1) Represents swap agreements related to the KeyBank Loan.

12. Preferred Shares

Series B-1 Preferred Shares

In February 2005 and June 2005 the Trust sold an aggregate of 4,000,000 shares of its Series B-1 Preferred Shares for $100,000,000, resulting in proceeds of approximately $94,164,000, net of costs of $5,836,000 for underwriting, placement agent and legal fees. The Series B-1 Preferred Shares have a liquidation value of $25 per share, pay cumulative dividends at a minimum rate of 6.5% and are convertible into Common Shares at a conversion price of $22.50, subject to anti-dilution adjustments. The Trust may convert all of the Series B-1 Preferred Shares if the closing price for the Common Shares for any 20 consecutive trading days within the 25-day period commencing on the date of mailing of the conversion notice exceeds 125% of the then conversion price. The Series B-1 Preferred Shares have a mandatory redemption feature requiring the Trust to redeem any remaining Series B-1 Preferred Shares outstanding on February 12, 2012.

The Trust has classified the Series B-1 Preferred Shares as liabilities pursuant to accounting guidance applicable at the time of issuance. Upon the conversion of the Series B-1 Preferred Shares to Common Shares, the shares converted will be classified as equity.

During 2008, at the request of holders of Series B-1 Preferred Shares, 493,552 Series B-1 Preferred Shares were converted into 548,389 Common Shares. There were no requests to convert Series B-1 Preferred Shares to Common Shares during the years ended December 31, 2009 and 2010. Through December 31, 2010, a total of 562,895 Series B-1 Preferred Shares have been converted into 625,436 Common Shares. Conversions are treated as equity transactions and any fees incurred in connection with a conversion are recorded as a reduction to paid-in-capital.

During the fourth quarter of 2008 the Trust acquired 1,024,000 Series B-1 Preferred Shares with a liquidation value of approximately $25,600,000 at a 25.5% discount from their liquidation value of $25 per share. The Trust determined that the repurchase of the Series B-1 Preferred Shares qualified as extinguishment of debt and recognized a gain of $6,284,000 and accounted for as extinguishment of debt.

During 2009 the Trust acquired an additional 1,017,105 Series B-1 Preferred Shares at a discount of 25.0% from their liquidation value of $25 per share. As a result, the Trust recorded a gain from the early extinguishment of debt of approximately $5,681,000 in 2009. At December 31, 2010 and 2009 there were 852,000 Series B-1 Preferred Shares outstanding with a liquidation value of $21,300,000.

91

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Series C Preferred Shares

In November 2009 the Trust permitted holders of its Series B-1 Preferred Shares to convert any or all of their Series B-1 Shares into an equivalent number of its newly issued Series C Preferred Shares. The Trust has issued 544,000 Series C Preferred Shares and 544,000 Series B-1 Preferred Shares have been retired. Following the consummation of the foregoing, at December 31, 2009 the Trust had 852,000 Series B-1 Preferred Shares and 544,000 Series C Preferred Shares outstanding.

The Series C Preferred Shares contain a liquidation preference, senior to the Common Shares but subordinate to the Series B-1 Preferred Shares, of $25 per share, pay cumulative dividends at a minimum rate of 6.5% and each Series C Preferred Share is presently convertible into approximately 1.786 common shares at any time at the option of the holder. In addition, the Series C Preferred Shares contain a mandatory redemption feature requiring the Trust to redeem any remaining Series C Preferred Shares outstanding on February 12, 2012. Since the Trust will be required to redeem the Series C Preferred Shares only if they are not converted by holders prior to the redemption date, the Trust has recorded the Series C Preferred Shares at fair value in mezzanine equity on the Consolidated Balance Sheet. Additionally, the conversion of the Series B-1 Preferred Shares to Series C Preferred Shares was treated as extinguishment of debt and the Trust recognized the difference between the book value of the converted Series B-1 Preferred Shares and the fair value of the Series C Shares as a $1,165,000 gain in the year ended December 31, 2009.

In March 2010 an investor converted 400,000 Series C Preferred Shares into 714,400 Common Shares resulting in a decrease in the outstanding Series C Preferred Shares to 144,000 at December 31, 2010 with a liquidation value of $3,600,000. The conversion of the Series C Preferred Shares results in a transfer to common equity. There was no gain or loss recognized from the conversion.

13. Common Shares

During 2008, the Trust acquired 70,000 of its Common Shares at an average price of $13.30 per share, aggregating approximately $930,000. These shares were retired at December 31, 2008. No additional Common Shares were repurchased during 2009 or 2010.

The following table sets forth information relating to sales of Common Shares during the years ended December 31, 2008, 2009 and 2010:

Date of Issuance	Number of Shares Issued		Price per Share			Type of Offering
January 15, 2008		64,308	$	25.35		DRIP (1)
April 15, 2008		41,026	$	20.65		DRIP
May 15, 2008		1,768,987	$	21.35		Rights Offering (2)
July 15, 2008		58,354	$	16.10		DRIP
October 15, 2008		85,950	$	11.52		DRIP
January 15, 2009		61,292	$	10.85		DRIP
April 15, 2009		7,462	$	8.27		DRIP
July 15, 2009		37,982	$	8.72		DRIP
October 15, 2009		63,471	$	8.96		DRIP
November 27, 2009		4,450,781	$	9.05		Rights Offering (3)
January 15, 2010		47,385	$	12.73		DRIP
April 15, 2010		44,181	$	13.75		DRIP
July 15, 2010		50,439	$	12.15		DRIP
September 27, 2010		5,750,000	$	12.25	(4)	Public Offering
October 15, 2010		48,398	$	12.53		DRIP

92

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)	The Trust’s Dividend Reinvestment and Stock Purchase Plan.
(2)	Rights offering pursuant to which each holder of Common Shares and Series B-1 Preferred Shares received one basic subscription right for every ten Common Shares owned, or in the case of Series B-1 Preferred Shares, one basic subscription right for every ten Common Shares issuable upon conversion of such Series B-1 Preferred Shares.
(3)	Rights offering pursuant to which each holder of Common Shares and Series B-1 Preferred Shares received one basic subscription right for every three and one-half Common Shares owned, or in the case of Series B-1 Preferred Shares, one basic subscription right for every three and one-half Common Shares issuable upon conversion of such Series B-1 Preferred Shares.
(4)	Before underwriting discount

14. Common Share Options

In May 2007 the Trust’s shareholders approved the Winthrop Realty Trust 2007 Long Term Incentive Plan (the “2007 Plan”) pursuant to which the Trust can issue options to acquire Common Shares and restricted share awards to its Trustees, directors and consultants. There are 100,000 Common Shares reserved for issuance under the 2007 Plan and as of December 31, 2010, no stock options or restricted stock awards have been issued.

In December 2003 the Board of Trustees granted 20,000 options under a Long Term Incentive Performance Plan to a Trustee who was Interim Chief Executive Officer and Interim Chief Financial Officer. The options have an exercise price of $11.15 and expire on December 16, 2013, no options have been exercised. There were no other options granted, cancelled or expired and in March 2005 the plan terminated.

15. Discontinued Operations

In October 2009 a tenant of the Trust’s retail net leased properties, The Kroger Company (“Kroger”), notified the Trust of its intention not to exercise its lease renewal options on six buildings containing approximately 281,000 square feet of retail space. Concurrently, Kroger also notified the Trust that it would be exercising its option to purchase one of these six properties, the Athens, Georgia property, resulting in the Trust classifying that property in discontinued operations effective with the fourth quarter of 2009. Upon receipt of the notice, management actively marketed the remaining locations for lease or sale.

The Lafayette, Louisiana and Sherman, Texas locations have been classified as discontinued operations as of September 30, 2010. During the quarter ended September 30, 2010, management determined that the potential market rents are not sufficient to cover prospective ground lease payments plus the costs to convert these properties to multi-tenant facilities. Therefore the Trust has decided to permit the ownership of the Sherman, Texas property to revert back to the land owner as of November 1, 2010. The Trust has elected not to make ground rent payments on the Lafayette, Louisiana property and anticipates that the ground owner will exercise its remedies and take title to the property. The Trust recorded a $704,000 impairment charge related to these investments which is included in discontinued operations for the year ended December 31, 2010.

The Knoxville, Tennessee location has also been classified as discontinued operations as of September 30, 2010. During the quarter ended September 30, 2010, management determined that after having exercised its purchase option under its ground lease and acquiring the land in October 2010 the best course of action is to pursue a sale of the real estate. As a result, the Trust recorded a $626,000 impairment charge which is included in discontinued operations for the year ended December 31, 2010. On February 24, 2011 the Trust entered into an agreement to sell this property subject to the buyer’s due diligence.

With respect to Kroger’s purchase of the Athens, Georgia property, in accordance with a three party agreement between the Trust, Kroger and the land owner, an appraisal process was conducted to determine the fair market value of the property. As a result of the finalization of the appraisal process, the Trust recorded an impairment charge of $1,390,000 during the year ended December 31, 2010.

93

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Results for discontinued operations for the years ended December 31, 2010, 2009 and 2008 are as follows (in thousands):

	2010			2009			2008
Revenues	$	900		$	2,517		$	3,853
Operating expenses		(80	)		(705	)		(762	)
Depreciation and amortization		(103	)		(480	)		(412	)
Impairment Loss		(2,720	)		—			—
Interest Expense		—			(467	)		(472	)
Income (loss) from discontinued operations	$	(2,003	)	$	865		$	2,207

16. Federal and State Income Taxes

The Trust has made no provision for regular current or deferred federal income taxes and no deferred state income taxes have been provided for on the basis that the Trust operates in a manner intended to enable it to continue to qualify as a real estate investment trust under Sections 856-860 of the Code. In order to qualify as a REIT, the Trust is generally required each year to distribute to its shareholders at least 90% of its taxable income (excluding any net capital gain). The Trust intends to comply with the foregoing minimum distribution requirements. As of December 31, 2010, the Trust has net operating loss carryforwards of approximately $24,040,000 which will expire from 2021 through 2023. The Trust does not expect to utilize any net operating loss carryforwards to offset 2010 taxable income. As a result of the February 28, 2005 issuance of the Series B-1 Preferred Shares, the Trust’s net operating loss carryforwards are subject to annual limitations pursuant to Section 382 of the Code. The Trust treats certain items of income and expense differently in determining net income reported for financial and tax purposes.

The Trust’s capital loss carryforwards of $60,732,000 which are not available in certain states and localities where the Trust has an obligation to pay income taxes. In addition, certain states and localities disallow state income taxes as a deduction and exclude interest income from United States obligations when calculating taxable income. Federal and state tax calculations can differ due to differing recognition of net operating losses. Accordingly, the Trust has recorded, $134,000, $157,000 and $329,000 in state and local taxes for the years ended December 31, 2010, 2009 and 2008, respectively.

The 2010, 2009 and 2008 cash dividends per Series B-1 Preferred Share for an individual shareholder’s income tax purposes were as follows:

			Capital Gains		Nontaxable		Total Dividends
	Ordinary Dividends		15% Rate		Distribution		Paid
2010	$	2.03	$	—	$	—	$	2.03
2009		1.22		—		—		1.22
2008		1.38		0.25		—		1.63

94

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2010 and 2009 cash dividends per Series C Preferred Share for an individual shareholder’s income tax purposes were as follows:

			Capital Gains		Nontaxable		Total Dividends
	Ordinary Dividends		15% Rate		Distribution		Paid
2010	$	2.03	$	—	$	—	$	2.03
2009		—		—		—		—

The 2010, 2009 and 2008 cash dividends per Common Share for an individual shareholder’s income tax purposes were as follows:

			Capital Gains		Nontaxable		Total Dividends
	Ordinary Dividends		15% Rate		Distribution		Paid
2010	$	0.65	$	—	$	—	$	0.65
2009		0.65		—		0.10		0.75
2008		0.48		0.09		—		0.57

The following table reconciles GAAP net income attributable to the Trust to taxable income (in thousands):

	For the Years Ended December 31,
	2010			2009			2008
Net income(loss) attributable to Winthrop Realty Trust	$	16,477		$	(84,347	)	$	(68,176	)
Book/Tax differences from depreciation and amortization expense		189			1,512			1,869
Book/Tax differences of accretion of discount		(8,782	)		(1,021	)		—
Book/Tax differences of unrealized gains		(10,080	)		(18,530	)		1,155
Book/Tax differences on gains/losses from capital transactions		1,655			1,532			(549	)
Book/Tax differences on Preferred Shares		1,563			(4,386	)		(90	)
Book/Tax differences for impairment losses		2,720			19,105			9,817
Book/Tax differences on investments in unconsolidated joint ventures		15,667			95,831			86,719
Other book/tax differences, net		(134	)		607			179
Book/Tax differences on dividend income		93			1,642			3,120
Taxable income	$	19,368		$	11,945		$	34,044

17. 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.

95

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concord CDO-1 Litigation

In 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 remain 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, it is expected that the trustee will release 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 distributions to CDFT, which distributions will be used by CDFT to repay the loan of $3,498,000 made by the Trust on December 30, 2010 and the purchase price owed by CDFT to the Trust on account of its purchase of CDO-1 bonds originally purchased by the Trust and which CDFT had an option to acquire.

Tenant Matters

The 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.

18. Related-Party Transactions

FUR Advisors

The activities of the Trust are administered by FUR Advisors LLC (“FUR Advisors”) pursuant to the terms of the Advisory Agreement between the Trust and FUR Advisors. FUR Advisors is controlled by and partially owned by the executive officers of the Trust. Pursuant to the terms of the Advisory Agreement, FUR Advisors is responsible for providing asset management services to the Trust and coordinating with the Trust’s shareholder transfer agent and property managers. FUR Advisors is entitled to receive a base management fee and an incentive fee in 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 years ended December 31, 2010, 2009 and 2008 to FUR Advisors and Winthrop Management (in thousands):

	For the Years Ended
	December 31, 2010			December 31, 2009			December 31, 2008
Base Asset Management Fee	$	5,225		$	3,233		$	5,616
WRP Sub-Management LLC Credit		(129	)		(255	)		(1,763	)
Property Management Fee		248			262			264
Construction Management Fee		24			38			23
	$	5,368		$	3,278		$	4,140

Base Asset Management Fee

Effective January 1, 2009 the calculation of the base management fee was amended to provide that (i) all Common Shares and Series B-1 Preferred Shares then issued and outstanding would be valued at a price of $11.00 per Common Share and $25.00 per Series B-1 Preferred Share, (ii) any additional future conversions, redemptions or repurchases of the Series B-1 Preferred Shares would not reduce the base equity for purposes of the base management fee calculation and (iii) any future issuances of common shares or preferred shares will increase the equity as per the existing agreement for purposes of the base management fee calculation.

96

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective January 1, 2010, the Advisory Agreement was amended so that the determination of the issuance price of Common Shares reverted back to the pre 2009 definition 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. This change will result in an increase without giving effect to any additional shares issuances, to the annual advisory fee payable to FUR Advisors of approximately $2,100,000 over what would have been paid without the amendment, which increase was phased in with 54% of the increase being paid during 2010. The full impact of the increase will be recognized in 2011.

Incentive Fee

The incentive fee entitles FUR Advisors to receive (a) an amount equal to 20% of all distributions paid to beneficiaries of Common Shares after December 31, 2003 in excess of the Threshold Amount, hereinafter defined, and, (b) upon the termination of the Advisory Agreement, an amount equal to 20% of the “liquidation value” of the Trust in excess of the Threshold Amount at the termination date. As defined in the Advisory Agreement, the Threshold Amount is equal to (x) $71,300,000, increased by the net issuance price of all Common Shares, with an adjustment for Preferred Shares converted, issued after December 31, 2003, and decreased by the redemption price of all Common Shares redeemed after December 31, 2003, plus (y) a return on the amount, as adjusted, set forth in (x) equal to 7% per annum compounded annually. The incentive fee is reduced by any direct damages to the Trust if the Advisory Agreement is terminated by the Trust for cause.

If the Advisory Agreement were terminated, the actual incentive fee payable would be based on an appraised valuation or the liquidation proceeds received for the Trust’s assets, which may be substantially in excess of the amount calculated based on the market price of the Common Shares.

Winthrop Management

Winthrop Management, an affiliate of FUR Advisors and the Trust’s executive officers, assumed property management responsibilities for various properties owned by the Trust pursuant to the terms of individual property management agreement.

Credits

In connection with the resignation by Michael L. Ashner, the Trust’s Chairman and Chief Executive Officer, as an officer and trustee of Lexington which was effective March 20, 2008, the Trust consented to FUR Advisors entering into a consulting agreement with Lexington pursuant to which FUR Advisors was to provide consulting services to Lexington through December 31, 2008. For providing these services, FUR Advisors was entitled to a fee of $1,500,000 (the “Consulting Fee”), which was to be paid in monthly installments of approximately $167,000, and the Trust received a credit against the base management fee payable by the Trust to FUR Advisors equal to the Consulting Fee. Accordingly, the Trust received a credit of $1,500,000 for the year ended December 31, 2008.

WRP Sub-Management LLC (“WRP Sub-Management”), an affiliate of FUR Advisors provides accounting, collateral management and loan brokerage services to CDO-1 and its subsidiaries. WRP Sub-Management received reimbursement of direct and indirect expenses totaling $716,000, $1,108,000 and $1,402,000 for the years ended December 31, 2010, 2009 and 2008, respectively, in accordance with the terms of the agreement. Of these amounts, $259,000, $511,000 and $526,000 were paid to reimburse it for costs associated with providing accounting and other “back-office” services for the benefit of Concord and CDO-1 (the “Affiliate Amount”). Because the Trust pays an advisory fee to FUR Advisors whereas Lexington does not, the advisory fee payable to FUR Advisors by the Trust is reduced by 50% of the Affiliate Amount to ensure equal treatment of the Trust and Lexington with respect to the reimbursements paid by Concord. For the years ended December 31, 2010, 2009 and 2008, the Trust received and utilized a credit of $129,000, $255,000 and $263,000, respectively, against the base management fee.

Other Transactions

On November 15, 2010, the Trust acquired for $662,000 tranche E bonds of CDH CDO with a face amount of $9,000,000. The bonds bear interest at Libor plus 1.2% and have a scheduled maturity of December 20, 2015. In February 2011, the trust sold these bonds to CDFT in exchange for a note in the amount of the Trust’s original purchase price plus accrued interest. The note bears interest at the same rate as the bonds.

97

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On December 30, 2010 in connection with the acquisition of the Metropolitan Tower rake bonds, pursuant to the terms of the CDH CDO operating agreement, CDH CDO borrowed $3,498,000 from the Trust. The loan bears interest at 12% and has a scheduled maturity date of December 30, 2015.

See Note 4 for additional activity between the Trust and Concord.

19. Future Minimum Lease Payments

Future minimum lease payments scheduled to be received under non-cancellable operating leases are as follows (amounts in thousands):

Year	Amount
2011	$	31,240
2012		30,818
2013		29,476
2014		25,992
2015		22,324
Thereafter		55,783
	$	195,633

Three tenants, each of which represents more than 10% of revenues, contributed approximately 44%, 41% and 39% of the base rental revenues of the Trust for the years ended December 31, 2010, 2009 and 2008, respectively, and represent approximately 43%, 24% and 24%, respectively, of the total rentable square footage of the operating property portfolio. The lease at the Churchill, Pennsylvania property which accounted for approximately 23% of the total rentable square footage of the operating property portfolio expired December 31, 2010. The Jacksonville, Florida property has one tenant that occupies approximately 94% of the rentable area effective February 2010.

20. Reportable Segments

The Financial Accounting Standards Board (“FASB”) guidance on segment reporting establishes standards for the way that public business enterprises report information about reportable segments in financial statements and requires that those enterprises report selected financial information about reportable segments in financial reports issued to shareholders.

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

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

One tenant provided revenues of $7,861,000, $7,860,000 and $7,860,000 for the years ended December 31, 2010, 2009 and 2008, respectively. This tenant accounted for 14.2%, 16.4% and 17.6% of total revenues for the years ended December 31, 2010, 2009 and 2008, respectively. These revenues are reported in the operating properties business segment.

98

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Trust’s assets by business segment and capital expenditures incurred for the Trust’s operating properties for the years ended December 31, 2010 and 2009 (in thousands):

	December 31, 2010		December 31, 2009
Assets
Operating properties	$	373,142	$	313,682
Loan assets		134,269		31,774
REIT securities		33,032		52,597
Corporate
Cash and cash equivalents		45,257		66,493
Restricted cash		8,593		9,505
Accounts receivable and prepaids		12,402		14,559
Deferred financing costs		1,158		1,495
Discontinued operations		2,275		3,087
Total Assets	$	610,128	$	493,192
Capital Expenditures
Operating Properties	$	6,121	$	2,548

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).

99

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a summary of revenues from operating properties, loan assets and REIT securities and expenses incurred by each segment for the years ended December 31, 2010, 2009, and 2008 (in thousands):

	2010			2009			2008
Operating Properties
Rents and reimbursements	$	38,239		$	40,021		$	41,504
Operating expenses		(8,674	)		(7,042	)		(6,767	)
Real estate taxes		(2,542	)		(2,542	)		(2,428	)
Impairment loss on investments in real estate		—			(10,000	)		(2,100	)
Equity in income of Marc Realty investments		1,776			281			—
Impairment loss on Marc Realty equity investment		—			(2,500	)		—
Equity in loss of Sealy Northwest Atlanta		(710	)		(457	)		(409	)
Equity in loss of Sealy Airpark Nashville		(1,107	)		(1,056	)		(1,023	)
Equity in loss of Sealy Newmarket		(1,193	)		(691	)		(250	)
Net operating income		25,789			16,014			28,527
Depreciation and amortization expense		(10,008	)		(10,585	)		(11,572	)
Interest expense		(13,193	)		(13,774	)		(14,289	)
Operating properties net income (loss)		2,588			(8,345	)		2,666
Loan Assets
Interest income		14,473			3,442			1,532
Equity in earnings of preferred equity investment in Marc Realty		338			78			5,868
Impairment loss on preferred equity investments		—			(2,186	)		(7,513	)
Equity in loss of Lex-Win Concord		—			(66,904	)		(30,207	)
Impairment loss on investment in Lex-Win Concord		—			(31,670	)		(36,543	)
Equity in earnings of WRT-ROIC		473			—			—
Equity in loss of PSW NYC		(1,246	)		—			—
Gain on loan securities carried at fair value		469			—			—
Gain on sale of mortgage backed securities		—			—			454
Gain on sale of other assets		—			—			24
Unrealized gain on loan securities carried at fair value		5,011			—			—
Impairment loss on available for sale loan		—			(203	)		—
Provision for loss on loans receivable		—			(2,152	)		(1,179	)
Net operating income (loss)		19,518			(99,595	)		(67,564	)
General and administrative expense		(300	)		(235	)		—
Interest expense		—			—			(206	)
Loan assets net income (loss)		19,218			(99,830	)		(67,770	)
REIT Securities
Dividends		2,655			3,894			916
Gain on sale of available for sale securities		—			—			1,580
Gain on sale of securities carried at fair value		558			5,416			—
Impairment loss on available for sale securities		—			—			(207	)
Unrealized gain on securities carried at fair value		5,060			17,862			24
Equity in loss of Lex-Win Acquisition, LLC		—			(95	)		(878	)
Net operating income		8,273			27,077			1,435
Interest expense		—			(75	)		(89	)
REIT securities net income		8,273			27,002			1,346
Net Income (Loss)		30,079			(81,173	)		(63,758	)
Reconciliations to GAAP Net Income (Loss):
Corporate Income (Expense)
Interest income		139			172			1,670
General and administrative		(8,534	)		(7,068	)		(6,887	)
Interest expense		(2,182	)		(2,815	)		(7,379	)
Gain on extinguishment of debt		—			6,846			6,284
State and local taxes		(134	)		(157	)		(329	)
Other		—			—			499
Income (loss) from continuing operations before non-controlling interest		19,368			(84,195	)		(69,900	)
Non-controlling interest		(888	)		(1,017	)		(483	)
Income (loss) from continuing operations attributable to Winthrop Realty Trust		18,480			(85,212	)		(70,383	)
Income (loss) from discontinued operations attributable to Winthrop Realty Trust		(2,003	)		865			2,207
Net Income (Loss) Attributable to Winthrop Realty Trust	$	16,477		$	(84,347	)	$	(68,176	)

100

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

21. Variable Interest Entities

Consolidated Variable Interest Entities

Andover 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. 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 $6,248,000, lease intangibles of $1,521,000 and mortgage debt of $6,135,000. Prior to the execution of the lease agreement, the Andover property was not considered a VIE but it has been consolidated since its acquisition.

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 $8,126,000 and lease intangibles of $2,341,000. There is no mortgage debt associated with this property.

Variable Interest Entities Not Consolidated

Equity Method Investments

Concord 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 (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 is not sufficient to finance their activities without additional subordinated financial support.

The restructuring of the Concord Investments was considered to be a reconsideration event under FASB’s consolidation guidance due to the material change in the agreements. As a result of the reconsideration, the Concord Investments were deemed to be variable interests in VIE’s, 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 and that the Trust has an obligation to absorb losses and has the right to residual returns of the entities. As a result of the existence of certain provisions in the operating agreements, Lexington, Inland and the Trust, three of the variable interest holders, hold identical one-third membership interests in each of the Concord Investments. By design and in practice, they share equally in the economics and the decision-making. Further, Lexington, Inland and the Trust which are otherwise unrelated parties, each have one-third of the voting rights of the equity of the Concord Investments. An affiliate of FUR Advisors is responsible for day-to-day administration and operations of the Concord investments, but decisions that most significantly impact the entity’s economic performance are jointly decided through their voting interests. Each member is deemed to have shared power, such that no party is considered to have the power to direct the activities of the VIE. In addition, there is no principal agency relationship through transfer restrictions that would indicate a primary beneficiary exists.

At December 31, 2010, 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.

101

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 December 31, 2010, the Trust’s investment in the Marc Realty equity investments was $62,150,000 and its investment in the preferred equity investment was $4,010,000.

Loans Receivable and Loan Securities — The Trust has reviewed its loans receivable and loan securities and certain of these assets have been identified as variable interests in a VIE because the equity investment at risk is not considered sufficient for the entity to finance its activities without additional subordinated financial support.

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.

102

WINTHROP REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

22. Quarterly Results of Operations (Unaudited)

The following is an unaudited condensed summary of the results of operations by quarter for the years ended December 31, 2010 and 2009. The Trust believes all adjustments (consisting of normal recurring accruals) necessary to present fairly such interim combined results in conformity with accounting principles generally accepted in the United States of America have been included.

	Quarters Ended
(In thousands, except per-share data)	March 31			June 30			September 30		December 31
2010
Revenues	$	12,584		$	13,079		$	14,246	$	15,458
Net income	$	4,205		$	4,576		$	3,808	$	3,888
Net income applicable to Common Shares	$	4,092		$	4,518		$	3,749	$	3,830
Per share
Net income applicable to Common Shares, basic	$	0.20		$	0.21		$	0.18	$	0.14
Net income applicable to Common Shares, diluted	$	0.20		$	0.21		$	0.18	$	0.14
2009
Revenues	$	12,262		$	12,173		$	12,636	$	10,286
Net income (loss)	$	(22,433	)	$	(71,196	)	$	15,157	$	(5,875	)
Net income (loss) applicable to Common Shares	$	(22,433	)		(71,196	)	$	14,318	$	(6,022	)
Per share
Net income (loss) applicable to Common Shares, basic	$	(1.42	)	$	(4.50	)	$	0.90	$	(0.34	)
Net income (loss) applicable to Common Shares, diluted	$	(1.42	)	$	(4.50	)	$	0.90	$	(0.34	)

23. Subsequent Event

All relevant events or transactions that occurred after the balance sheet date not otherwise disclosed and incorporated in the Notes to the Consolidated Financial Statements are described below.

On February 23, 2011 the Trust acquired through a 50/50 joint venture 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. The loan bears interest at a rate of 9.33%, matures in May 2011 and is subject to one six month extension option.

On March 3, 2011 the Trust amended its existing revolving line of credit with KeyBank, 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%. On March 7, 2011, the Trust utilized $8,799,000 under the revolving line of credit to repay the maturing mortgage loans encumbering the Andover and Burlington properties and approximately $2,186,000 to payoff the balance on the mortgage loan payable with Keybank. In addition, we drew down $16,000,000 on the line of credit to fund new investments.

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 proceed of approximately $10,676,000 and cash on hand of approximately $6,143,000 were used to pay down the mortgage loan payable with KeyBank by $16,819,000.

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 own the general partnership interests in and developer fees and advances receivable of approximately $57,500,000 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.

In February 2011 the Trust entered into separate contracts to sell two properties located in St. Louis, Missouri and Knoxville, Tennessee for an aggregate purchase price of $3,900,000 subject to the purchasers’ due diligence.

103

ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2010. Based on such evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Trust’s disclosure controls and procedures are effective.

Management’s Report on Internal Control Over Financial Reporting

The Trust’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Trust’s internal control over financial reporting is a process which was designed under the supervision of the Trust’s principal executives and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Trust’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Trustees of the Trust; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Trust’s assets that could have a material affect on our financial statements.

As of December 31, 2010 the Trust’s management conducted an assessment of the effectiveness of the Trust’s internal control over financial reporting. The Trust’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control — Integrated Framework.” Based on that assessment and those criteria, we concluded that our internal control over financial reporting is effective as of December 31, 2010.

The effectiveness of the Trust’s internal control over financial reporting as of December 31, 2010 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing in this Form 10-K.

Changes in Internal Controls Over Financial Reporting

There has been no change in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B — OTHER INFORMATION

None

104

PART III

ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information about Trustees of the Trust may be found under the caption “Election of Trustees” presented in our Proxy Statement for the Annual Meeting of Shareholders, expected to be held in May 2011, which we refer to as the Proxy Statement. That information is incorporated herein by reference.

The information in the Proxy Statement under the captions “Executive Officers” “Section 16(a) Beneficial Ownership Reporting Compliance”, “Audit Committee Financial Expert” and “Code of Ethics” presented in the Proxy Statement is incorporated herein by reference.

ITEM 11 — EXECUTIVE COMPENSATION

The information in the Proxy Statement under the captions “Compensation of Trustees” and “Executive Compensation” presented in the Proxy Statement is incorporated herein by reference.

ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information in the Proxy Statement under the caption “Security Ownership of Trustees, Officers and Others” presented in the Proxy Statement is incorporated herein by reference.

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information in the Proxy Statement under the caption “Certain Transactions and Relationships” and “Independence of Trustees” presented in the Proxy Statement is incorporated herein by reference.

ITEM 14 — PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information in the Proxy Statement under the captions “Compensation of Trustees” and “Principal Accountant Fees and Services” presented in the Proxy Statement is incorporated herein by reference.

105

PART IV

ITEM 15 — EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Financial Statement Schedules.

(1) Financial Statements:

Reports of Independent Registered Public Accounting Firm on page 56 of ITEM 8.

Management’s Report on Internal Controls over Financial Reporting on page 104 of ITEM 9A.

Consolidated Balance Sheets — December 31, 2010 and 2009 on page 57 of ITEM 8.

Consolidated Statements of Operations and Comprehensive Income — For the Years Ended December 31, 2010, 2009 and 2008 on page 58 of ITEM 8.

Consolidated Statements of Shareholders’ Equity — For the Years Ended December 31, 2010, 2009 and 2008 on page 59 of ITEM 8.

Consolidated Statements of Cash Flows — For the Years Ended December 31, 2010, 2009 and 2008 on pages 61 and 62 of ITEM 8.

Notes to Consolidated Financial Statements on pages 63 through 103 of ITEM 8.

(2) Financial Statement Schedules:

Schedule III — Real Estate and Accumulated Depreciation.

All Schedules, other than III, are omitted, as the information is not required or is otherwise furnished.

(b) Exhibits.

The exhibits listed on the Exhibit Index on page 110 are filed as a part of this Report or incorporated by reference.

106

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Trust has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WINTHROP REALTY TRUST
Dated: March 16, 2011	By:	/s/ Michael L. Ashner
		Michael L. Ashner
		Chief Executive Officer
Dated: March 16, 2011	By:	/s/ Thomas Staples
		Thomas Staples
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ Michael L. Ashner	Trustee	March 16, 2011
/s/ Carolyn Tiffany	Trustee	March 16, 2011
Arthur Blasberg, Jr.
Howard Goldberg
Thomas McWilliams
Lee Seidler
Steven Zalkind	Trustee	March 16, 2011

By:	/s/ Carolyn Tiffany
	Carolyn Tiffany, as attorney-in fact

107

WINTHROP REALTY TRUST

SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
At December 31, 2010
(amounts in thousands)

									Cost
									capitalized/(impaired)
									subsequent to
					Initial Cost to Registrant				acquisition			As of December 31, 2010
			Mortgage				Building and		Land/Building and					Building and				Accumulated		Date
Description	Location	Location	Encumbrances		Land		Improvements		Improvements			Land		Improvements		Total		Depreciation		Acquired		Life
Continuing Operations:
Office	Orlando	FL	$	38,657	$	—	$	17,248	$	42		$	—	$	17,290	$	17,290	$	2,647		11/2004	40 yrs
Office	Plantation	FL		—		—		8,915		4,020			4,000		8,935		12,935		1,368		11/2004	40 yrs
Office	Indianapolis	IN		4,245		270		1,609		6,268			1,763		6,384		8,147		3,414		10/1974	40 yrs
Office	Chicago	IL		20,828		—		23,635		1,745			—		25,380		25,380		3,586		10/2005	40 yrs
Office	Amherst	NY		16,116		1,591		18,027		—			1,591		18,027		19,618		2,535		5/2005	40 yrs
Office	Andover	MA		6,135		—		7,611		717			1,200		7,128		8,328		881		12/2005	40 yrs
Office	South Burlington	VT		2,629		—		3,099		314			—		3,413		3,413		392		12/2005	40 yrs
Office	Chicago	IL		9,100		1,149		9,989		4,796			1,149		14,785		15,934		1,081		10/2007	40 yrs
Office	Houston	TX		60,351		7,075		62,468		—			7,075		62,468		69,543		9,500		1/2005	40 yrs
Office	Lisle	IL		16,973		3,774		16,371		591			3,774		16,962		20,736		2,027		2/2006	40 yrs
Office	Lisle	IL		6,932		2,361		6,298		290			2,361		6,588		8,949		783		2/2006	40 yrs
Office	Lisle	IL		5,600		780		2,803		463			780		3,266		4,046		372		2/2006	40 yrs
Office	Phoenix	AZ		—		801		7,387		25			801		7,412		8,213		86		8/2010	40 yrs
Office	Englewood	CO		—		2,580		5,403		—			2,580		5,403		7,983		45		11/2010	40 yrs
Office	Englewood	CO		—		1,829		5,612		—			1,829		5,612		7,441		15		12/2010	40 yrs
				187,566		22,210		196,475		19,271			28,903		209,053		237,956		28,732
Retail	Atlanta	GA		—		—		4,633		5			—		4,638		4,638		710		11/2004	40 yrs
Retail	Louisville	KY		—		—		2,722		377			373		2,726		3,099		417		11/2004	40 yrs
Retail	St. Louis	MO		—		—		990		649			647		992		1,639		152		11/2004	40 yrs
Retail	Greensboro	NC		—		—		3,797		4			—		3,801		3,801		582		11/2004	40 yrs
Retail	Memphis	TN		—		—		760		637			635		762		1,397		117		11/2004	40 yrs
Retail	Denton	TX		—		—		1,574		918			915		1,577		2,492		241		11/2004	40 yrs
Retail	Seabrook	TX		—		—		1,393		618			616		1,395		2,011		214		11/2004	40 yrs
				—		—		15,869		3,208			3,186		15,891		19,077		2,433
Other	Jacksonville	FL		—		2,166		8,684		1,491			2,166		10,175		12,341		1,523		11/2004	40 yrs
Other	Churchill	PA		—		—		23,834		(9,963	)		—		13,871		13,871		3,405		11/2004	40 yrs
Other	Meriden	CT		23,875		2,887		22,367		—			2,887		22,367		25,254		139		10/2010	40 yrs
Other (1)				19,002		—		—		—			—		—		—		—
				42,877		5,053		54,885		(8,472	)		5,053		46,413		51,466		5,067
Total from Continuing Operations			$	230,443	$	27,263	$	267,229	$	14,007		$	37,142	$	271,357	$	308,499	$	36,232
(1)     Represents a first mortgage loan collateralized by the Finova properties.          The aggregate cost in the properties for federal income tax purposes was approximately									$	228,541

108

SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
(amounts in thousands)

The following is a reconciliation of real estate assets and accumulated depreciation:

	Year Ended December 31,
	2010			2009			2008
Real Estate
Balance at beginning of period	$	249,078		$	267,706		$	266,290
Additions during the period:
Land		9,408			—			—
Buildings and improvements		6,121			2,548			3,376
Consolidation of Deer Valley		8,188			—			—
Consolidation of Newbury Apartments		25,254			—			—
Consolidation of Crossroads II		7,983			—			—
Purchase of Crossroads I		7,441			—			—
Transfer (to) from discontinued operations, net		(3,970	)		(10,811	)		140
Impairments during the period		—			(10,000	)		(2,100	)
Disposal of fully amortized assets		(1,004	)		(365	)		—
Balance at end of period	$	308,499		$	249,078		$	267,706
Accumulated Depreciation
Balance at beginning of period	$	31,269		$	25,901		$	19,214
Additions charged to operating expenses		6,399			6,652			6,701
Transfer (to) from discontinued operations, net (1)		(432	)		(919	)		(14	)
Disposal of fully amortized assets		(1,004	)		(365	)		—
Balance at end of period	$	36,232		$	31,269		$	25,901

(1) In 2010, the Knoxville, Tennessee; Lafayette, Louisiana and Sherman, Texas properties were placed into discountinued operations. In 2009, the Athens, Georgia property was placed into discontinued operations and the Kansas City, Kansas property was foreclosed.

109

		Page
Exhibit	Description	Number
3.1	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 by reference to Exhibit 10.4 to the Trust’s Form 8-K filed December 1, 2003.	—

110

		Page
Exhibit	Description	Number
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.	*
10.20	Guaranty from Winthrop Realty Trust and certain of its Subsidiaries in favor of KeyBank, National Association.	*

111

		Page
Exhibit	Description	Number
21	List of Subsidiaries	*
23.1	Consent of Independent Accounting Firm — PricewaterhouseCoopers LLP	*
23.2	Consent of Independent Accounting Firm — PricewaterhouseCoopers LLP (Lex-Win Concord financials)	*
24	Power of Attorney	*
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.	*
99.1	Consolidated Financial Statements of Lex-Win Concord LLC	*

* filed herewith

112

EX-10.19

Exhibit 10.19

AMENDED AND RESTATED LOAN AGREEMENT

Dated: As of MARCH 3, 2011

Among

WRT REALTY L.P., a Delaware

limited partnership

(the “Borrower”)

and

KEYBANK, NATIONAL ASSOCIATION (“Agent”),

and

KEYBANK, NATIONAL ASSOCIATION

and any other Lenders, which are, or may become, parties to this Agreement (the “Lenders”)

Up to $150,000,000.00 Credit Facility

KEYBANC CAPITAL MARKETS (“Arranger”)

TABLE OF CONTENTS

	Page
ARTICLE 1 BACKGROUND		1
1.1 Defined Terms		1
1.2 Borrower		1
1.3 Use of Loan Proceeds		1
1.4 Guaranties		1
1.5 Loan		2
ARTICLE 2 LOAN PROVISIONS		2
2.1 The Facility/Advances		2
2.2 Term of Loan; Extension Rights		4
2.3 Interest Rate and Payment Terms		4
2.4 Interest Rate		4
2.5 Principal		6
2.6 Fees		8
2.7 Acceleration		9
2.8 Conditions to Extending Loan		9
2.9 Increased Costs and Capital Adequacy		10
2.10 Borrower Withholding		11
2.11 Interest Rate Agreements		12
ARTICLE 3 SECURITY FOR THE LOANS; LOAN AND SECURITY DOCUMENTS		12
3.1 Security for Loan		12
3.2 Loan Documents and Security Documents		14
3.3 Additional Borrowing Base Collateral		14
3.4 Removal of Borrowing Base Assets		15
ARTICLE 4 CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES		16
4.1 Authorized Representatives		16
ARTICLE 5 CONDITIONS PRECEDENT		16
5.1 Satisfactory Loan Documents and Related Documents; Loan Agenda Items		16
5.2 Financial Information; No Material Change		16
5.3 Warranties and Representations Accurate		17
5.4 Validity and Sufficiency of Security Documents		17
5.5 Payment Direction And Authorization		18
5.6 Litigation		18
5.7 Formation Documents and Entity Agreements		18
5.8 Compliance With Law		19
5.9 Compliance With Financial Covenants		19
5.10 Due Diligence		19
5.11 Condition of Property		19
5.12 Insurance		20
5.13 Third Party Consents and Agreements		20
5.14 Legal Opinions		20

- i -

	Page
5.15 No Default		20
5.16 Patriot Act/OFAC		20
ARTICLE 6 WARRANTIES AND REPRESENTATIONS		20
6.1 Formation		20
6.2 Proceedings; Enforceability		21
6.3 Conflicts		21
6.4 Ownership and Taxpayer Identification Numbers		21
6.5 Litigation		22
6.6 Information		22
6.7 Taxes		22
6.8 Financial Information		22
6.9 Management Agreements		22
6.10 Control Provisions		22
6.11 Formation Documents		23
6.12 Related Documents		23
6.13 Bankruptcy Filings		23
6.14 Options		23
6.15 Investment Company		23
6.16 Holding Company		23
6.17 Individual Properties		23
6.18 Use of Proceeds		25
6.19 Insurance		25
6.20 Deferred Compensation and ERISA		25
6.21 No Default		26
6.22 Other Loan Parties’ Warranties and Representations		26
ARTICLE 7 AFFIRMATIVE COVENANTS		26
7.1 Notices		26
7.2 Financial Statements; Reports; Officer’s Certificates		26
7.3 Existence		29
7.4 Payment of Taxes		30
7.5 Insurance; Casualty, Taking		30
7.6 Inspection		30
7.7 Loan Documents		30
7.8 Further Assurances		30
7.9 Books and Records		31
7.10 Business and Operations		31
7.11 Title		31
7.12 Estoppel		32
7.13 ERISA		32
7.14 Depository Accounts		33
7.15 Cash Flow; Payment Direction Letters		33
7.16 Distributions		34
7.17 Costs and Expenses		34
7.18 Appraisals		34
7.19 Indemnification		34
7.20 RESERVED		35

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	Page
7.21 Future Collateral Obligations		35
7.22 Replacement Documentation		35
7.23 Other Covenants		36
7.24 Related Documents		36
7.25 Reserved		36
7.26 Financial Covenants		36
ARTICLE 8 NEGATIVE COVENANTS		39
8.1 No Changes to the Borrower and other Loan Parties		39
8.2 Restrictions on Liens		39
8.3 Consolidations, Mergers, Sales of Assets, Issuance and Sale of Equity		40
8.4 Restrictions on Debt		41
8.5 Respecting Individual Properties		42
8.6 Other Business		42
8.7 Change of Control		42
8.8 Forgiveness of Debt		42
8.9 Affiliate Transactions		42
8.10 Amendments; Terminations of Related Documents		42
8.11 ERISA		42
8.12 Bankruptcy Filings		42
8.13 Investment Company		42
8.14 Holding Company		42
8.15 Use of Proceeds		43
8.16 Distributions		43
8.17 Restrictions on Investments		43
8.18 Negative Pledges, Etc.		43
ARTICLE 9 SPECIAL PROVISIONS		44
9.1 Legal Requirements		44
9.2 Recourse Provisions		44
9.3 Payment of Obligations		44
ARTICLE 10 EVENTS OF DEFAULT		44
10.1 Default and Events of Default		44
10.2 Grace Periods and Notice		48
ARTICLE 11 REMEDIES		49
11.1 Remedies		49
11.2 Written Waivers		49
11.3 Power of Attorney		49
ARTICLE 12 SECURITY INTEREST AND SET-OFF		50
12.1 Security Interest		50
12.2 Set-Off		50
12.3 Application		51
12.4 Right to Freeze		51
12.5 Additional Rights		51

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	Page
ARTICLE 13 THE AGENT AND THE LENDERS		51
13.1 Appointment		51
13.2 Reliance on Agent		51
13.3 Powers		51
13.4 Disbursements		52
13.5 Distribution and Apportionment of Payments		53
13.6 Agency Provisions Relating to Collateral		56
13.7 Lender Actions Against Borrower or the Collateral		57
13.8 Assignment and Participation		58
13.9 Ratable Sharing		58
13.10 General Immunity		58
13.11 No Responsibility for Loan, Recitals, Etc.		58
13.12 Action on Instructions of Lenders		59
13.13 Employment of Agents and Counsel		59
13.14 Reliance on Documents; Counsel		59
13.15 Agent’ Reimbursement and Indemnification		59
13.16 Rights as a Lender		59
13.17 Lenders’ Credit Decisions		60
13.18 Notice of Events of Default		60
13.19 Successor Agent		60
13.20 Distribution by Agent		61
13.21 Holders		61
13.22 Assignment and Participation		61
13.23 Several Liability		64
13.24 Miscellaneous Assignment Provisions		64
13.25 Assignment by Borrower		65
13.26 Consents and Approvals		65
13.27 Lead Arranger		67
ARTICLE 14 GENERAL PROVISIONS		67
14.1 Notices		67
14.2 Limitations on Assignment		69
14.3 Further Assurances		69
14.4 Payments		69
14.5 Parties Bound		69
14.6 Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial		70
14.7 Survival		71
14.8 Cumulative Rights		71
14.9 Claims Against Agent or Lenders		71
14.10 Regarding Consents		72
14.11 Obligations Absolute		72
14.12 Table of Contents, Title and Headings		72
14.13 Counterparts		72
14.14 Satisfaction of Commitment		72
14.15 Time Of the Essence		72
14.16 No Oral Change		72
14.17 Patriot Act		72
14.18 Electronic Information		73
14.19 Monthly Statements		74

- iv -

EXHIBITS

Exhibit A	—	Definitions
Exhibit B	—	Form of Assignment and Assumption Agreement
Exhibit C	—	Form of Note
Exhibit D	—	Authorized Representatives
Exhibit E	—	Required Property, Hazard and Other Insurance
Exhibit F	—	Ownership Interests and Taxpayer Identification Numbers
Exhibit G-1	—	Form of Compliance Certificate
Exhibit G-2	—	Form of Financial Covenant Compliance Certificate
Exhibit G-3	—	Form of Borrowing Base Certificate
Exhibit H	—	Form of Notice of Rate Selection
Exhibit I	—	Lenders’ Commitments
Exhibit K	—	Loan Agenda
Exhibit L	—	Reserved
Exhibit M	—	Pledged Subsidiaries
Exhibit N	—	Pledged Securities

- v -

SCHEDULES

Schedule 6.9	22
Schedule 6.10	23
Schedule 6.17.3	25
Schedule 6.17.4	25
Schedule 6.17.5	25
Schedule 6.17.7	26
Schedule 8.4.2(b)	44

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THIS AMENDED AND RESTATED LOAN AGREEMENT AMENDS AND RESTATES IN ITS ENTIRETY THAT CERTAIN LOAN AGREEMENT, AS AMENDED (THE ‘ORIGINAL AGREEMENT”) DATED AS OF DECEMBER 16, 2005 ENTERED INTO BETWEEN WRT REALTY L.P., AS BORROWER, KEYBANK, NATIONAL ASSOCIATION, AS AGENT, AND THE VARIOUS LENDERS PARTY THERETO

AMENDED AND RESTATED LOAN AGREEMENT

This agreement (“Loan Agreement” or “Agreement”) is made and entered into as of the 3^rd day of March, 2011, by and between WRT REALTY L.P., a Delaware limited partnership having an address of 7 Bulfinch Place, Suite 500, P.O. Box 9507, Boston, Massachusetts 02114 (the “Borrower”), KEYBANK NATIONAL ASSOCIATION, a national banking association, having an address at 225 Franklin Street, 18^th Floor, Boston, Massachusetts 02110, and the other lending institutions which are, or may become, parties to this Agreement pursuant to Section 13.22 (singly and collectively, the “Lenders”), KEYBANK NATIONAL ASSOCIATION, a national banking association, with a place of business at 127 Public Square, Cleveland, Ohio 44114, as Agent for itself and such other lending institutions (the “Agent”), and KEYBANC CAPITAL MARKETS, as the Arranger.

WITNESSETH:

ARTICLE 1

BACKGROUND

1.1 Defined Terms. Capitalized terms used in this Agreement are defined either in Exhibit A, or in specific sections of this Agreement, or in another Loan Document, as referenced in Exhibit A.

1.2 Borrower. The Borrower is a limited partnership organized under the laws of the State of Delaware. Winthrop Realty Trust, an Ohio business trust (the “REIT”), is the holder of 100% of the preferred units and 99.8% of the common units in the Borrower, and WRT TRS Management Corp. (“Management”) is the holder of .2% of the common units in the Borrower.

1.3 Use of Loan Proceeds. The Borrower has applied to Lenders for a revolving loan facility (the “Facility”) of up to ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000.00), with an initial commitment of FIFTY MILLION DOLLARS ($50,000,000.00) (each advance under the Facility being a “Loan” and collectively, the “Loans”), the proceeds of which are to be used to provide funding for the working capital of the Borrower and its Subsidiaries.

1.4 Guaranties. As an inducement to Lenders to make the Loans, the following entities have agreed to furnish certain guaranties and indemnities to the Agent with respect to the Loan (the following, in such capacity, are severally and collectively called “Guarantor”): (i) REIT, (ii) WRT TRS Management Corp., a Delaware corporation and a wholly owned subsidiary of REIT, and (iii) the following Subsidiaries of the Borrower (each, a “Subsidiary Guarantor”): FT-FIN Acquisition LLC, FT-FIN GP LLC, WRT-DV, LLC, WRT Property Holdings LLC, WRT-Andover Property LLC, WRT-South Burlington Property LLC, WRT-Andover Property Manager LLC, WRT-South Burlington Property Manager LLC, WRT-Crossroads One LLC, WRT-Crossroads LLC, FT-WD Property LLC, FT-KRG (Atlanta) LLC, FT-KRG (Greensboro) LLC, FT-KRG (Denton) LLC FT-KRG (Louisville) LLC, FT-KRG (Memphis) LLC, FT-KRG (Seabrook) LLC, and FT KRG Property LP (all Delaware limited liability companies or Delaware limited partnerships).

1.5 Loan. Subject to all of the terms, conditions and provisions of this Agreement, and of the agreements and instruments referred to herein, each of the Lenders agrees severally to make Loans to the Borrower under the Facility up to the amount such Lender’s Commitment, and the Borrower agrees to accept and repay the Loans.

ARTICLE 2
LOAN PROVISIONS

2.1 The Facility/Advances.

2.1.1 Subject to Section 2.1.2, in no event shall the aggregate amount of Loans outstanding from time to time exceed the lesser of (a) the Facility Amount or (b) the Borrowing Base (the lesser of (a) or (b) being the “Availability”).

2.1.2 Provided no Default or Event of Default shall then be in existence (or would be after giving effect thereto), the Borrower shall have the right prior to March 3, 2014, to elect to further increase the Facility Amount and obtain Loans (subject in all instances to the terms and conditions of this Agreement) from the Lenders in the amount of such increase; provided, however, that (i) the total of such increases shall not be in excess of One Hundred Million Dollars ($100,000,000.00) in the aggregate, (ii) such increases shall be approved by the Agent, such approval not to be unreasonably withheld, (iii) each such increase shall be in a minimum amount of $10,000,000.00, (iv) after any such increase the Facility Amount shall not exceed the Total Commitments of the Lenders (as such may be increased after the date hereof) as determined by the Agent, and (v) the Borrower pays the commitment fee on such increase set forth in the addendum to the Agent’s terms letter. Such right may be exercised by the Borrower by written notice to the Agent (which the Agent will forward promptly to the Lenders), which election shall designate the increased Facility Amount. The Borrower shall execute and deliver any and all documentation and satisfy other conditions reasonably required by the Agent in order to evidence and effectuate the increase in the Facility Amount, including, without limitation, any new or replacement Note(s) as may be required by any Lender changing its Commitment or any new Lender issuing a new Commitment, and payment of any commitment fee by the Borrower as may be required by the Agent in connection with such increase. Any such increase of the Facility Amount shall not be effective until written confirmation from the Agent to the Borrower and the Lenders of such increased amount and the confirmation that such amount does not exceed the Total Commitments of the Lenders. The Borrower acknowledge and agree that neither Agent nor any Lender has agreed to increase its Commitment to provide funding for such increased Facility Amount, and that any such agreement by Agent or any Lender shall be in its sole discretion. The Arranger agrees to exercise reasonable best efforts to secure such additional commitments if so requested by Borrower. The Arranger shall give the existing Lenders written notice of the Borrower’s request to so increase the Facility Amount hereunder, and the existing Lenders shall have a right of first refusal with

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respect to electing to increase their respective Commitments, which right must be exercised by providing the Agent with written notice of such election within ten (10) Business Days of the notice provided by the Arranger. In the event the existing Lenders shall agree to increase their Commitments by an amount that is in excess of the requested increase, such increased Commitments shall be allocated by the Agent on a pro rata basis. In connection with any increase in the Facility Amount, (a) no Lender shall be required to increase the amount of such Lender’s Commitment, and (b) each existing Lender’s respective Percentage shall be adjusted to reflect the participation of the new Lender (or existing Lender increasing its Commitment) in the Facility and the increase in the Total Commitment.

2.1.3 Any and all advances of proceeds of the Loans shall be made by the Lenders pro rata in accordance with each Lender’s Percentage. Loans may be prepaid and reborrowed in accordance with the provisions hereof, provided the aggregate principal amount of Loans outstanding from any Lender shall not exceed at any one time such Bank’s Commitment.

2.1.4 The aggregate principal amount of each Borrowing of Loans hereunder shall be not less than One Million Dollars ($1,000,000.00) for Adjusted Prime Rate Loans, and Five Million Dollars ($5,000,000.00) for LIBOR Rate Loans, or in greater integral multiples of One Million Dollars ($1,000,000.00) thereafter.

2.1.5 The obligations of the Lenders hereunder are several and not joint. Failure of any Lender to fulfill its obligations hereunder shall not result in any other Lender becoming obligated to advance more than its Percentage of any Loan, nor shall such failure release or diminish the obligations of any other Lender to fund its Percentage provided herein.

2.1.6 Each request for a Loan hereunder shall constitute a representation and warranty by Borrower that the conditions set forth in ARTICLE 5 hereof, as the case may be, have been satisfied on the date of such request and will be satisfied on the proposed drawdown date, unless otherwise disclosed in writing to the Agent prior to or at the time of such request, including the Borrower’s continued compliance with the Financial Covenants, except to the extent the contemplated Loan will result in noncompliance with the Financial Covenants. Notwithstanding any such disclosure, the disclosure by Borrower to Agent that one or more of the conditions set forth in ARTICLE 5 hereof are not satisfied as of the date of Borrower’s request for a Loan or will not be satisfied as of the proposed Drawdown Date shall entitle Agent to refuse to make the Loan requested by Borrower.

2.1.7 The Borrower shall have the right to terminate or reduce the aggregate Facility Amount at any time and from time to time without penalty or premium upon not less than 5 Business Days prior written notice to the Agent of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction and shall be irrevocable once given and effective only upon receipt by the Agent; provided, however, (a) that Lenders shall be indemnified for any breakage and redeployment costs associated with any LIBOR Loans, (b) any reductions shall be the in minimum increments of $10,000,000.00, applied pro rata to each Lender’s Commitment, and (c) if the Borrower seeks to reduce the aggregate amount of the Commitments below $50,000,000.00, then such Commitments shall all automatically and permanently be reduced to zero. The Agent will promptly transmit such notice to each Lender. The Commitments, once terminated or reduced may not be increased or reinstated.

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2.2 Term of Loan; Extension Rights. The Facility shall be for a term (“Initial Term”) commencing on the date hereof and ending on March 3, 2014 (“Initial Maturity Date”). The Initial Term of the Facility may be extended for one (1) year (“Extended Term”) until March 3, 2015 (“Extended Maturity Date”) upon satisfaction of the conditions set forth in Section 2.8.

2.3 Interest Rate and Payment Terms. The Loans shall be payable as to interest and principal in accordance with the provisions of this Agreement and the Note. This Agreement also provides for interest at a Default Rate, Late Charges and prepayment rights and fees. All payments for the account of Lenders made by the Borrower shall be applied to the respective accounts of the Lenders in accordance with each Lender’s Percentage of the Loan. The Agent will disburse such payments to the Lenders on the date of receipt thereof if received prior to 10:00 a.m. on such date and, if not, on the next Business Day. Any and all interest rate selection and conversion provisions in this Agreement are to be administered by the Agent and to be allocated on a pro rata basis to the portion of the balance due under the Notes held by each Lender based upon such Lender’s Percentage.

2.4 Interest Rate.

2.4.1 The Loans will bear interest at the Applicable Rate, unless the Default Rate is applicable. The Adjusted Prime Rate shall be the “Applicable Rate”, except that the Adjusted LIBOR Rate shall be the “Applicable Rate” with respect to portions of the Loans as to which a LIBOR Rate Option is then in effect. For each disbursement of proceeds of the Loan, Borrower shall deliver to Agent irrevocable notice (which may be verbal notice provided that Borrower delivers to Agent facsimile confirmation or electronic mail confirmation within twenty four (24) hours of such verbal notice) of the requested amount of such disbursement (x) if such disbursement is to bear interest at the Adjusted Prime Rate, not later than 11:00 a.m. Eastern Time on the second Business Day prior to the desired date of disbursement and (y) if such disbursement is to bear interest at an Adjusted LIBOR Rate, not later than 11:00 a.m. Eastern Time on the third Business Day prior to the desired date of disbursement. Commencing April 1, 2011, Borrower shall pay interest in arrears on the first day of every calendar month in the amount of all interest accrued and unpaid on the Loan. All payments (whether of principal or of interest) shall be deemed credited to Borrower’s account only if received by 12:00 noon Eastern Time on a Business Day; otherwise, such payment shall be deemed received on the next Business Day.

2.4.2 Provided that no Event of Default exists, Borrower shall have the option (the “LIBOR Rate Option”) to elect from time to time in the manner and subject to the conditions hereinafter set forth an Adjusted LIBOR Rate as the Applicable Rate for all or any portion of a Loan which would otherwise bear interest at the Adjusted Prime Rate.

4

2.4.3 The only manner in which Borrower may exercise the LIBOR Rate Option is by giving Agent irrevocable notice (which may be verbal notice provided that Borrower delivers to Agent facsimile or email confirmation in the form of Exhibit H attached hereto within twenty-four (24) hours) of such exercise not later than 11:00 a.m. Eastern Time on the second LIBOR Business Day prior to the proposed commencement of the relevant LIBOR Rate Interest Period, which written notice shall specify: (i) the portion of the Loans with respect to which Borrower is electing the LIBOR Rate Option, (ii) the LIBOR Business Day upon which the applicable LIBOR Rate Interest Period is to commence and (iii) the duration of the applicable LIBOR Rate Interest Period. The Applicable Rate for any portion of the Loans with respect to which Borrower has elected the LIBOR Rate Option shall revert to the Adjusted LIBOR Rate with a LIBOR Rate Interest Period of one-month (the “One-Month LIBOR Rate”), as of the last day of the LIBOR Rate Interest Period applicable thereto (unless Borrower again exercises the LIBOR Rate Option for such portion of the Loan). Agent shall be under no duty to notify Borrower that the Applicable Rate on any portion of the Loan is about to revert from an Adjusted LIBOR Rate to the One-Month LIBOR Rate. The LIBOR Rate Option may be exercised by Borrower only with respect to any portion of the Loans equal to or in excess of $500,000.00. At no time may there be more than six (6) LIBOR Rate Interest Periods in effect with respect to the Loan.

2.4.4 If Agent determines (which determination shall be conclusive and binding upon Borrower, absent manifest error) (i) that Dollar deposits in an amount approximately equal to the portion of the Loans for which Borrower has exercised the LIBOR Rate Option for the designated LIBOR Rate Interest Period are not generally available at such time in the London interbank market for deposits in Dollars, (ii) that the rate at which such deposits are being offered will not adequately and fairly reflect the cost to any Lender of maintaining a LIBOR Rate on such portion of the Loans or of funding the same for such LIBOR Rate Interest Period due to circumstances affecting the London interbank market generally, (iii) that reasonable means do not exist for ascertaining a LIBOR Rate, or (iv) that an Adjusted LIBOR Rate would be in excess of the maximum interest rate which Borrower may by law pay, then, in any such event, to the extent that such Lender makes such determination generally with respect to its Borrower who borrow funds at a rate based upon the LIBOR Rate, Agent shall so notify Borrower and all portions of the Loans bearing interest at an Adjusted LIBOR Rate that are so affected shall, as of the date of such notification with respect to an event described in clause (ii) or (iv) above, or as of the expiration of the applicable LIBOR Rate Interest Period with respect to an event described in clause (i) or (iii) above, bear interest at the Adjusted Prime Rate until such time as the situations described above are no longer in effect or can be avoided by Borrower exercising a LIBOR Rate Option for a different LIBOR Rate Interest Period.

2.4.5 Interest at the Applicable Rate (or Default Rate) shall be calculated for the actual number of days elapsed on the basis of a 360-day year, including the first date of the applicable period to, but not including, the date of repayment.

2.4.6 Borrower shall pay all Breakage Costs incurred from time to time by Lender upon demand within fifteen (15) Business Days of receipt of written notice from Agent.

5

2.4.7 If the introduction of or any change in any law, regulation or treaty, or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof, shall make it unlawful for any Lender to maintain the Applicable Rate at an Adjusted LIBOR Rate with respect to the Loans or any portion thereof, or to fund the Loans or any portion thereof in Dollars in the London interbank market, or to give effect to its obligations regarding the LIBOR Rate Option as contemplated by the Loan Documents, then, to the extent that such Lender makes such determination generally with respect to its Borrower who borrow funds at a rate based upon the LIBOR Rate, (1) Agent shall notify Borrower that such Lender is no longer able to maintain the Applicable Rate at an Adjusted LIBOR Rate, (2) the LIBOR Rate Option shall immediately terminate, (3) the Applicable Rate for any portion of the Loans for which the Applicable Rate is then an Adjusted LIBOR Rate shall automatically be converted to the Adjusted Prime Rate, and (4) Borrower shall pay to Agent the amount of Breakage Costs (if any) incurred by such Lender in connection with such conversion. Thereafter, Borrower shall not be entitled to exercise the LIBOR Rate Option until such time as the situation described herein is no longer in effect or can be avoided by Borrower exercising a LIBOR Rate Option for a different LIBOR Rate Interest Period. So long as no Event of Default has occurred and is continuing, upon written demand of Borrower, the Borrower may with thirty (30) days written notice to the Agent, require any such Lender unable to maintain the Applicable Rate at an Adjusted LIBOR Rate pursuant to this Section 2.4.7 to sell and assign its entire interest in the Loans pursuant to Section 13.22 hereof to any Eligible Assignee identified by the Borrower in its demand and reasonably approved by the Agent, upon payment by such Eligible Assignee of the entire par amount of such Lender’s interest in the Loan, plus any applicable Breakage Costs.

2.5 Principal.

2.5.1 Scheduled Payments. No scheduled payments of principal shall be due prior to the Maturity Date.

(a) Mandatory Principal Repayments. The Borrower shall make mandatory prepayments of principal equal to the excess of the outstanding balance of the Facility, over the Availability, as determined by the Agent from time to time (singly and collectively, the “Mandatory Principal Prepayments”) each of which shall be due and payable on the later of (x) within five (5) Business Days of the event giving rise to such Mandatory Principal Prepayment obligation (the “Mandatory Prepayment Event”) or (y) within three (3) Business Days of written demand therefor by the Agent; provided, however, at the request of the Borrower, the Agent agrees to hold the amount of any such Mandatory Principal Prepayment in the Mandatory Principal Payment Account (as defined in the Cash Management Agreement or as otherwise established with the Agent and pledged to the Agent, on behalf of the Lenders, to secure the repayment of the Obligations), until the earlier of (x) the expiration of any relevant Interest Period so that the prepayment can be made without the Borrower incurring any costs under Section 2.5.7 or (y) ninety (90) days:

Any Mandatory Principal Prepayment shall be applied to then outstanding principal balance due under the Loan.

6

(b) Prepayment. Notwithstanding anything to the contrary contained in this Agreement or any of the other Loan Documents to the contrary, the Loans or any portion thereof may be prepaid in whole or in part by the Borrower on any Business Day during the term of the Loan, upon five (5) days’ prior written notice to the Agent. Any prepayment made pursuant to the foregoing shall be accompanied by the payment of interest accrued through the date of prepayment and the payment of any applicable Breakage Costs.

2.5.2 Maturity. At maturity all accrued interest, principal and other charges due with respect to the Loans shall be due and payable in full and the principal balance and such other charges, but not unpaid interest, shall bear interest at the Default Rate until so paid.

2.5.3 Method of Payment; Date of Credit. All payments of interest, principal and fees shall be made in lawful money of the United States in immediately available funds, without counterclaim or set off and free and clear, and without any deduction or withholding for, any taxes (other than income taxes or franchise taxes of any Lender) or other payments (a) by direct charge to an account of Borrower maintained with Agent (or then holder of the Loan), or (b) by wire transfer to Agent or to such other bank or address as the holder of the Loans may designate in a written notice to Borrower. Payments shall be credited on the Business Day on which immediately available funds are received prior to 12:00 noon Cleveland Time; payments received after 12:00 noon Eastern Time shall be credited to the Loans on the next Business Day; payments which are by check, which Agent may at its option accept or reject, or which are not in the form of immediately available funds shall not be credited to the Loans until such funds become immediately available to Agent, and, with respect to payments by check, such credit shall be provisional until the item is finally paid by the payer bank.

2.5.4 Billings. Agent may submit monthly billings reflecting payments due from the Borrower; however, any changes in the interest rate which occur between the date of billing and the due date may be reflected in the billing for a subsequent month. Neither the failure of Agent to submit a billing nor any error in any such billing shall excuse the Borrower from the obligation to make full payment of the Borrower’s payment obligations when due.

2.5.5 Default Rate. Agent shall have the option of imposing (and shall upon demand of the Required Lenders impose), and Borrower shall pay upon billing therefor, an interest rate which is four percent (4%) per annum above the interest rate otherwise payable (“Default Rate”): (a) following any Event of Default, unless and until the Event of Default is cured with the consent of Required Lenders or waived by Required Lenders; and (b) after Maturity. Borrower’s right to select LIBOR pricing options shall be suspended upon the occurrence and during the continuance of a monetary Default or following any Event of Default or at Maturity.

2.5.6 Late Charges. The Borrower shall pay, upon billing therefor, a “Late Charge” equal to five percent (5%) of the amount of any regularly scheduled payment of principal (other than principal due at Maturity or any Mandatory Principal Prepayment), interest, or both, which is not paid within ten (10) days of the due date thereof (other than with respect to any payment as to which the said ten (10) day period expires after the implementation of the Default Rate). Late charges are: (a) except as provided above, payable in addition to, and not in limitation of, the Default Rate, (b) intended to compensate Agent for administrative and processing costs incident to late payments, (c) are not interest, and (d) shall not be subject to refund or rebate or credited against any other amount due.

7

2.5.7 Prepayment Costs. The Borrower shall pay to Agent, immediately upon request and notwithstanding contrary provisions contained in any of the Loan Documents, such amounts as shall, in the conclusive judgment of Agent (in the absence of manifest error), compensate Agent and the Lenders for the loss, cost or expense which they may reasonably incur as a result of (i) any payment or prepayment, under any circumstances whatsoever, whether voluntary or involuntary, of all or any portion of an Adjusted LIBOR Rate Advance on a date other than the last day of the applicable Interest Period of an Adjusted LIBOR Rate Advance, (ii) the conversion, for any reason whatsoever, whether voluntary or involuntary, of any Adjusted LIBOR Rate Advance to a Adjusted Prime Rate Advance on a date other than the last day of the applicable Interest Period, (iii) the failure of all or a portion of a Loan which was to have borne interest at the Adjusted LIBOR Rate pursuant to the request of Borrower to be made under the Loan Agreement (except as a result of a failure by any Lender to fulfill such Lender’s obligations to fund), or (iv) the failure of the Borrower to borrow in accordance with any request submitted by it for an Adjusted LIBOR Rate Advance. Such amounts payable by the subject Borrower shall be equal to (a) any administrative costs actually incurred plus (b) the Breakage Costs.

2.6 Fees.

2.6.1 Loan Fees. Borrower shall pay to the Agent the fees as and when provided in the addendum to the terms letter between the Borrower and the Agent. The fee shall be based upon the amount of the Total Commitment and shall be fully earned by the Agent on the Closing Date.

2.6.2 Unused Commitment Fee. The Borrower agree to pay to the Agent for distribution to each Lender an unused commitment fee (the “Unused Commitment Fee”) for the period from the Closing Date until the Maturity Date (or such earlier date as the Total Commitment shall have been terminated) equal to the average daily amount of the Total Commitment then in effect which was unused (through the extension of Loans) during the immediately preceding calendar quarter calculated on the basis of actual days elapsed over the actual number of days for such quarter, multiplied by 35 basis points (.35%). The Unused Commitment Fee shall be due and payable quarterly in arrears on the first day of each quarter and on the Maturity Date or upon such earlier date as the Total Commitment shall be terminated

2.6.3 Extension Fees. The Borrower shall pay to the Agent for the account of the Lenders “Extension Fees” (so referred to herein) in amounts representing one quarter of one percent (0.25%) of the Total Commitment of the Lenders at the Initial Maturity Date, in connection with the Borrower’s exercise of its extension right, and as a condition precedent to the effectiveness thereof, in each instance, as provided in Section 2.8. In the event the Facility is not extended for any reason, the Agent shall promptly return the Extension Fee to the Borrower.

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2.7 Acceleration. The Agent may, and upon the request of the Required Lenders shall, accelerate the applicable Loan, after the occurrence and during the continuance of an Event of Default. Upon such an acceleration, all principal, accrued interest and costs and expenses shall be due and payable together with interest on such principal at the Default Rate and any applicable Prepayment Fee and any amounts due under Section 2.5.7.

2.8 Conditions to Extending Loan. Upon satisfaction of each of the following conditions, the Borrower may extend the Facility until the Extended Maturity Date:

2.8.1 No Default. No Default shall exist on the date of the Borrower’s written notice for an extension as provided for below and on the Initial Maturity Date.

2.8.2 Notice From Borrower. The Borrower shall have given Agent written notice of its request to exercise its extension right at least sixty (60) days, but no more than ninety (90) days, before the Initial Maturity Date.

2.8.3 Covenant Compliance. No breach of any covenants imposed upon the Borrower shall exist including, without limitation, the Financial Covenants;

2.8.4 Conditions Satisfied. All of the conditions set forth in Article 5 of this Agreement shall continue to be satisfied;

2.8.5 Extension Fee. The Extension Fee of 0.25% of the Facility referred to in Section 2.6.3 shall have been paid at least five (5) days prior to the Initial Maturity Date;

2.8.6 Additional Documents. The Borrower and each Guarantor shall have executed and delivered to Agent such agreements and documents as Agent may reasonably require to effectuate the extension; provided, however, none of said requested agreements or documents shall provide for additional collateral or include any substantive modification of the terms and provisions of the Loan Documents;

2.8.7 Before End of Term. Each of the foregoing conditions are satisfied not later than, and on, the Initial Maturity Date. Within twenty (20) days following receipt by Agent of Borrower’s written notice under clause 2.8.2 above requesting the extension accompanied by the items described in Section 2.8, Agent shall notify the Borrower in writing if all of the conditions precedent to the extension, other than payment of the extension fee, have been satisfied, or if further information or documents set forth in Section 2.8 are required, specifying such missing information or documents. If Agent determines that the conditions to extension have been satisfied (or if the Agent notified the Borrower as provided above of any outstanding information or documents required by this Section 2.8, specifying such missing information or documents, and the Borrower provides outstanding information or documents prior to ten (10) days before the Initial Maturity Date), other than payment of the Extension Fee, Agent shall so notify the Borrower and upon Agent’s receipt of the Extension Fee not later than five (5) days prior to the Initial Maturity Date, so long as no Default exists, the term of the Facility shall be extended until the Extended Maturity Date.

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2.9 Increased Costs and Capital Adequacy.

2.9.1 Borrower recognizes that the cost to any Lender of maintaining the Loans or any portion thereof may fluctuate and, to the extent that such Lender makes such determination generally with respect to similarly situated borrowers, Borrower agrees to pay Agent additional amounts to compensate any such Lender for any increase in its actual costs incurred in maintaining the Loans or any portion thereof outstanding or for the reduction of any amounts received or receivable from Borrower as a result of:

(a) any change after the date hereof in any applicable law, regulation or treaty, or in the interpretation or administration thereof, or by any domestic or foreign court, (A) changing the basis of taxation of payments under this Agreement to any Lender (other than taxes imposed on all or any portion of the overall net income or receipts of Lenders or franchise taxes), or (B) imposing, modifying or applying any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, credit extended by, or any other acquisition of funds for loans by any Lender (which includes the Loans or any applicable portion thereof) (provided, however, that Borrower shall not be charged again the Reserve Percentage already accounted for in the definition of the Adjusted LIBOR Rate), or (C) imposing on any Lender, or the London interbank market generally, any other condition affecting the Loan, provided that the result of the foregoing is to increase the cost to any Lender of maintaining the Loans or any portion thereof or to reduce the amount of any sum received or receivable from Borrower by any Lender under the Loan Documents; or

(b) the maintenance by any Lender of reserves in accordance with reserve requirements promulgated by the Board of Governors of the Federal Reserve System of the United States with respect to “Eurocurrency Liabilities” of a similar term to that of the applicable portion of the Loans (without duplication for reserves already accounted for in the calculation of a LIBOR Rate pursuant to the terms hereof).

So long as no Event of Default has occurred and is continuing, upon written demand of Borrower, the Borrower may with thirty (30) days’ written notice to the Agent, require any such Lender whose costs of maintaining the Loans or any portion thereof has increased as provided for in this Section 2.9.1 to sell and assign its entire interest in the Loans pursuant to Section 13.22 hereof to any Eligible Assignee identified by the Borrower in its demand and reasonably approved by the Agent, upon payment by such Eligible Assignee of the entire par amount of such Lender’s interest in the Loan, plus any compensation required to be paid hereunder and any applicable Breakage Costs.

2.9.2 If the application of any law, rule, regulation or guideline adopted or arising out of the report of the Basel Committee on Banking Regulations and Supervisory Practices entitled “International Convergence of Capital Measurement and Capital Standards”, or the adoption after the date hereof of any other law, rule, regulation or guideline regarding capital adequacy, or any change after the date hereof in any of the foregoing, or in the interpretation or administration thereof by any domestic or foreign Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof (with the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives

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thereunder issued in connection therewith or in implementation thereof being deemed to have occurred after the date hereof, regardless of the date enacted, adopted, issued or implemented), or compliance by any Lender, with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has the effect of reducing the rate of return on such Lender’s capital to a level below that which such Lender would have achieved but for such application, adoption, change or compliance (taking into consideration the policies of such Lender with respect to capital adequacy), then, to the extent that such Lender requires such compensation generally with respect to similarly situated Borrower, from time to time Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction with respect to any portion of the Loans outstanding. So long as no Event of Default has occurred and is continuing, upon written demand of Borrower, the Borrower may with thirty (30) days written notice to the Agent, require any such Lender to whom compensation is due and payable by the Borrower as provided for in this Section 2.9.2 to sell and assign its entire interest in the Loans pursuant to Section 13.22 hereof to any Eligible Assignee identified by the Borrower in its demand and reasonably approved by the Agent, upon payment by such Eligible Assignee of the entire par amount of such Lender’s interest in the Loan, plus any compensation required to be paid hereunder and any applicable Breakage Costs.

2.9.3 Any amount payable by Borrower under subsection 2.9.1 or 2.9.2 above shall be paid within five (5) days of receipt by Borrower of a certificate signed by an authorized officer of Agent setting forth the amount due and the basis for the determination of such amount, which statement shall be conclusive and binding upon Borrower, absent manifest error. Failure on the part of Agent to demand payment from Borrower for any such amount attributable to any particular period shall not constitute a waiver of Lender’s right to demand payment of such amount for any subsequent or prior period. Agent shall use reasonable efforts to deliver to Borrower prompt notice of any event described in subsection 2.9.1 or 2.9.2 above, of the amount of the reserve and capital adequacy payments resulting therefrom and the reasons therefor and of the basis of calculation of such amount; provided, however, that any failure by Agent so to notify Borrower shall not affect Borrower’s obligation to pay the reserve and capital adequacy payment resulting therefrom.

2.10 Borrower Withholding. If by reason of a change in any applicable laws occurring after the date hereof, or, as to an Eligible Assignee acquiring an interest in the Loans after the date hereof, after such Eligible Assignee purchases such interest in the Loan, Borrower is required by law to make any deduction or withholding in respect of any taxes (other than taxes imposed on or measured by the net income of any Lender or any franchise tax imposed on any Lender), duties or other charges from any payment due under the Note to the maximum extent permitted by law, to the extent that such Lender imposes such requirement generally with respect to similarly situated Borrower, the sum due from Borrower in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, each Lender receives and retains a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made. So long as no Event of Default has occurred and is continuing, upon written demand of Borrower, the Borrower may with thirty (30) days written notice to the Agent, require any such Lender requiring the Borrower to make such deductions or withholdings as set forth in this Section 2.10 to sell and assign its entire interest in the Loans pursuant to Section 13.22 hereof to any Eligible Assignee identified by the Borrower in its demand and reasonably approved by the Agent, upon payment by such Eligible Assignee of the entire par amount of such Lender’s interest in the Loan, plus any amounts required to be paid hereunder and any applicable Breakage Costs.

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2.11 Interest Rate Agreements.

2.11.1 Any indebtedness incurred pursuant to an Interest Rate Agreement entered into by Borrower and Agent shall constitute indebtedness evidenced by the Note and secured by the other Loan Documents to the same extent and effect as if the terms and provisions of such Interest Rate Agreement were set forth herein, whether or not the aggregate of such indebtedness, together with the disbursements made by Lenders of the proceeds of the Loan, shall exceed the face amount of the Note.

2.11.2 Borrower hereby collaterally assigns to Agent for the benefit of Lenders any and all Interest Rate Protection Products, if any, purchased or to be purchased by Borrower in connection with the Loan, as additional security for the Loan, and agrees to provide Lenders with any additional documentation requested by Lenders in order to confirm or perfect such security interest during the term of the Loan. If Borrower obtains an Interest Rate Protection Product from a party other than Agent, Borrower shall deliver to Lenders such third party’s consent to such collateral assignment. No Interest Rate Protection Product purchased from a third party may be secured by an interest in Borrower or the Collateral.

ARTICLE 3
SECURITY FOR THE LOANS; LOAN AND SECURITY DOCUMENTS

3.1 Security for Loan. The Loans, together with interest thereon and all other charges and amounts payable by, and all other Obligations of, the Borrower and the other Loan Parties to the Agent and/or each of the Lenders, shall be secured by the following collateral (the “Collateral”) which the Borrower agrees to provide and maintain (certain of which was previously executed and/or delivered in connection with the Original Agreement), or cause to be provided and maintained (whether provided for each in separate agreements or combined with various other agreements):

3.1.1 Security Agreement. To the extent permitted under the terms of the applicable Formation Documents, a first priority security agreement and collateral assignment granted by the Borrower to the Agent, on behalf of the Lenders, respecting all assets of the Borrower, whether now owned, now due, or in which the Borrower has an interest, or hereafter, at any time in the future, acquired, arising, to become due, or in which the Borrower obtains an interest.

3.1.2 Borrower Ownership Interest Pledge and Security Agreements. First priority Ownership Interest Pledge and Security Agreements granted by the Borrower to the Agent, on behalf of the Lenders, with respect (a) to all right, title, and interest of the Borrower to and in the Borrower’s respective ownership interests in those Subsidiaries as set forth in Exhibit M annexed hereto, and (b) all right, title, and interest of the Borrower to and in the Securities (the “Pledged Securities”) described on Exhibit N annexed hereto, together with any required third party consents, waivers or control agreements required in order to vest, perfect and confirm the Agent’s lien and rights with respect to such interests.

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3.1.3 Depository Account Pledge and Security Agreements. A first priority Depository Account Pledge and Security Agreement granted by the Borrower and any Loan Party to the Agent, on behalf of the Lenders, respecting any of the Borrower’s Accounts to the extent established by such Persons at KEYBANK NATIONAL ASSOCIATION (or any successor thereto or affiliate thereof) (singly and collectively the “Depository Account Pledge and Security Agreement”).

3.1.4 Guaranties and Security Agreements from Guarantor. The unlimited guaranty from each Guarantor, pursuant to which each Guarantor shall guaranty the prompt, punctual, and faithful payment of the Loans and the performance of all other Obligations to the Agent and each of the Lenders under the Loan Documents (singly and collectively, the “Guaranty”); a portion of the initial advances to be made under this Facility will be utilized to repay in full the outstanding balances due under that certain Loan Agreement dated as of November 18, 2004, as amended, entered into by FT-FIN Acquisition LLC (“FT-Fin”) and KeyBank National Association, as Agent; as consideration for the repayment of the obligations of FT-Fin pursuant to the advances made hereunder, FT-Fin has agreed, on behalf of itself and certain of its subsidiaries, that the various collateral and other guaranties executed and/or delivered certain collateral by FT-FIN and such subsidiaries shall be continue in full force and effect and shall be deemed modified and amended to constitute guaranties of and such collateral shall secure the Obligations of the Borrower hereunder, and Borrower agrees to cause FT-FIN and such subsidiaries to execute all such documents and take such action as the Agent may request in order to confirm the guaranty by such parties of, and the grant of collateral by such parties to secure, the Obligations of the Borrower hereunder.

3.1.5 Subsidiary Collateral Documents. The following collateral documents granted to the Agent from the applicable Subsidiary listed below:

(a) An Ownership Interest Pledge and Security Agreement granted by FT-FIN with respect to its ownership interests in FT-WD Property LLC, a Delaware limited liability company, together with all necessary consents and agreements required by the Agent in connection therewith;

(b) An Ownership Interest Pledge and Security Agreement granted by FT-KRG Property L.P., a Delaware limited partnership, with respect to its ownership interests in FT-KRG (Atlanta) LLC, FT-KRG (Denton) LLC, FT-KRG (Louisville) LLC, FT-KRG (Memphis) LLC , FT-KRG (Seabrook) LLC, and FT-KRG (Greensboro) LLC, each a Delaware limited liability company, together with all necessary consents and agreements required by the Agent in connection therewith; and

(c) An Ownership Interest Pledge and Security Agreement granted by WRT Property Holdings LLC, WRT-Andover Property Manager LLC, and WRT-South Burlington Property Manager LLC, each a Delaware limited liability company, with respect to their respective ownership interests in WRT-Crossroads LLC, WRT-Crossroads One LLC, WRT-Andover Property Manager LLC, WRT-South Burlington Property Manager LLC, WRT-Andover Property LLC, and WRT-South Burlington Property LLC, each a Delaware limited liability company, together with all necessary consents and agreements required by the Agent in connection therewith.

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3.1.6 Environmental Compliance and Indemnification Agreement. A compliance and indemnification agreement with respect to environmental matters (“Environmental Indemnity”) from the Borrower and each Guarantor (collectively, the “Indemnitor”) in favor of the Agent and each of the Lenders.

3.1.7 Additional Documents. Any other documents, instruments and agreements with respect to the Loans as set forth on the Loan Agenda.

3.2 Loan Documents and Security Documents. The Loans shall be made, evidenced, administered, secured and governed by all of the terms, conditions and provisions of the “Loan Documents”, each as the same may be hereafter modified or amended, consisting of: (i) this Loan Agreement; (ii) the promissory notes in the form of Exhibit C, annexed hereto, payable by the Borrower to each of the respective Lenders in the original aggregate principal amount of up to FIFTY MILLION DOLLARS ($50,000,000.00) (collectively, the “Note”); (iii) the various documents and agreements referenced in Section 3.1, above; (iv) any Consents or Payment Direction Letters executed by any Borrower Subsidiary; (v) the Interest Rate Agreement (if any), (vi) the Cash Management Agreement (if any); and (vii) any other documents, instruments, or agreements heretofore or hereafter executed to further evidence or secure the Loan.

Each of the Loan Documents listed above is dated as of the date hereof. The Loan Documents referenced in Section 3.1 , together with any additional documents granted in favor of the Agent under Section 3.3 in connection with the grant of Additional Collateral, are sometimes referred to herein, singly and collectively as the “Security Documents”.

3.3 Additional Borrowing Base Collateral. From time to time during the term of this Agreement following Borrower’s written request (“Additional Collateral Request”), and the Borrower’s compliance with the provisions of this Section 3.3, the Required Lenders shall authorize the Agent to accept additional unencumbered assets (“Additional Collateral”) from the Borrower or any Borrower Subsidiary or other Loan Party as a Borrowing Base Asset and include the value of such Additional Collateral in the determination of the Borrowing Base (based on the formula set forth in the definition of Borrowing Base, or on such other basis as the Agent and the Lenders may reasonably determine with respect to such Additional Collateral). The Lenders shall agree to the inclusion of such Additional Collateral in the Borrowing Base Assets Pool, only upon the satisfaction of the following conditions, in a manner reasonably acceptable to the Agent and the Required Lenders:

3.3.1 No Event of Default shall exist under this Agreement or the other Loan Documents at the time of the Additional Collateral Request or at the time of any such assets becoming Additional Collateral hereunder, except for any Default which is cured or remedied by such Additional Collateral becoming part of the Borrowing Base.

3.3.2 All representations and warranties contained herein or in the other Loan Documents shall be true and correct in all material respects as of the time of the delivery of any such Additional Collateral (or shall become true by virtue of such Additional Collateral becoming part of the Borrowing Base), including the Borrower’s continued compliance with the Financial Covenants.

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3.3.3 The Borrower shall pay or reimburse the Agent for all appraisal fees, title insurance and recording costs, reasonable legal fees and expenses and other costs and expenses incurred by Agent in connection with the additional Collateral.

3.3.4 The Borrower or the applicable Loan Party shall have executed all such documents and taken all such action (and caused any Person to take such action and execute such documents) as the Agent may reasonably request to vest, perfect and confirm the guaranties, liens and security interests required by the Agent with respect to such Additional Collateral.

3.3.5 The Borrower, any applicable Borrower Subsidiary or Loan Party, and the subject Additional Collateral shall have satisfied all applicable conditions precedent set forth in Article 5 prior to the inclusion of the Additional Collateral in the Borrowing Base.

Any failure of the proposed Additional Collateral to meet in all material respects all of the foregoing conditions shall be deemed a rejection of the proposed addition of the Additional Collateral in the Borrowing Base for that Additional Collateral Request and such proposed Additional Collateral shall not be included in the Borrowing Base for any purpose unless and until all of the foregoing conditions are satisfied or waived by the Agent and the Required Lenders. The Agent shall give the Borrower prompt written notice of the decision of the Required Lenders with respect to the admission or rejection of any Additional Collateral as a component of the Borrowing Base.

3.4 Removal of Borrowing Base Assets. So long as there is no Default pending, the Borrower may from time to time have a Borrowing Base Asset removed from the Borrowing Base Assets Pool. In such event, the Borrower shall provide to the Agent written notice thereof (each a “Removal Request”) no later than 10:00 a.m. (New York, New York time) on the Business Day that is at least five (5) Business Days prior to the date on which the Borrower wishes to have such Borrowing Base Asset removed from the Borrowing Base Assets Pool, such Removal Request to (i) identify the Borrowing Base Asset proposed to be removed from the Borrowing Base Assets Pool, (ii) set forth the calculation of the Borrowing Base value attributable to such Borrowing Base Asset from the Borrowing Base Certificate in order to determine the amount of any payment required by Section 2.5.1(a), and (iii) have attached thereto a pro forma Borrowing Base Certificate. Upon receipt by the Agent of any prepayment required by Section 2.5.1(a) and provided no Default is then pending, the subject Borrowing Base Asset shall cease to be part of the Borrowing Base Asset Pool hereunder and the Agent shall provide prompt written notice of such removal to each Lender.

Notwithstanding any other provision of this Agreement or the other Loan Documents, the Agent and the Lenders acknowledge and agree that in the event any Borrower Subsidiary shall own an asset which is not intended to be in the Borrowing Base Assets Pool, such Borrower Subsidiary shall be permitted to sell, finance, encumber or otherwise transfer such asset without the approval of the Agent or the Lenders and without the requirement of any payment hereunder.

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ARTICLE 4
CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES

4.1 Authorized Representatives. Agent and each of the Lenders are authorized to rely upon the continuing authority of the persons, officers, signatories or agents hereafter designated (“Authorized Representatives”) to bind the Borrower with respect to all matters pertaining to the Loans and the Loan Documents including, but not limited to, the selection of interest rates, the submission of any request for a Loan and certificates with regard thereto. Such authorization may be changed only upon written notice to Agent accompanied by evidence, reasonably satisfactory to Agent, of the authority of the person giving such notice. The present Authorized Representatives as to the Borrower are listed on Exhibit D. The Agent shall have a right of approval, not to be unreasonably withheld or delayed, over the identity of the Authorized Representatives so as to assure Agent and each of the Lenders that each Authorized Representative is a responsible and senior official of the Borrower.

ARTICLE 5
CONDITIONS PRECEDENT

It shall be a condition precedent of Lenders’ obligation to close the Facility and to fund the initial Loans under the Facility that each of the following conditions precedent be satisfied in full (as determined by each Lender in its discretion which discretion shall be exercised in good faith having due regard for the advice of the Agent), unless specifically waived in writing by all of the Lenders at or prior to the date of the funding of the initial Loans under the Facility (the date of the closing of the Loan shall be referred to herein as the “Closing Date” and the date of the initial Loan under the Facility shall be referred to herein as the “Funding Date”), and the Lenders shall, subject to compliance with all of the other terms, conditions and provisions of this Agreement, make disbursement of the initial Loan under the Facility on the Closing Date and shall, if so requested by Borrower as and when provided in Section 2.1 and as otherwise provided herein, make disbursement of Loans subject to the satisfaction of said following conditions precedent:

5.1 Satisfactory Loan Documents and Related Documents; Loan Agenda Items. On the Funding Date, each of the Loan Documents and the Related Documents shall be satisfactory in form, content and manner of execution and delivery to Agent and Agent’s counsel and all Loan Documents and Related Documents shall be in full force and effect. Without limiting the foregoing, the Agent shall have received each of the instruments, documents, and agreements itemized on the Loan Agenda, each executed and delivered in favor of, and/or in form and substance reasonably satisfactory to, the Agent.

5.2 Financial Information; No Material Change.

(a) No change shall have occurred in the financial condition, business, affairs, operations or control of the Borrower, the Loan Parties, and/or the other Loan Parties since the date of their respective financial statements most recently delivered to Agent, which change has had or could reasonably be expected to have a Material Adverse Effect; and the Borrower and the other Loan Parties shall have furnished Agent such other financial information and certifications as reasonably requested by the Agent.

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(b) The absence of any material adverse change in the loan syndication, financial or capital market conditions generally from those currently in effect.

(c) The Borrower shall have provided to the Agent a copy certified by an officer of the Borrower of its balance sheet after giving effect to the Loan, to evidence that the Borrower is solvent, has assets having a fair value in excess of the amount required to pay the Borrower’s probable liabilities on the Borrower’s existing Debts as such become absolute and mature, and has adequate capital for the conduct of the Borrower’s business and the ability to pay the Borrower’s Debts from time to time incurred in connection therewith as such Debts mature.

5.3 Warranties and Representations Accurate. All warranties and representations made by or on behalf of any of the Borrower and the other Loan Parties, or any of them, to Agent or any of the Lenders shall be true, accurate and complete in all material respects and, to the best of the Borrower’s Knowledge, shall not omit any material fact necessary to make the same not misleading.

5.4 Validity and Sufficiency of Security Documents. The Security Documents shall create a valid and perfected lien on the Collateral described therein and each of the Security Documents and related UCC filings shall have been duly recorded and filed to the satisfaction of Agent and Agent’s counsel, including, without limitation, as follows:

(a) On the Funding Date, the Borrower and the other Loan Parties shall have delivered to the Agent evidence of the completion of all recordings and filings of, or with respect to, the Security Documents or, in the case of UCC-1 financing statements, delivery of such financing statements in proper form for recording, and shall have taken all such other actions as may be necessary or, in the reasonable opinion of the Agent, desirable to perfect the Liens and security interests intended to be created by the Security Documents in the Collateral covered thereby. Such filings, recordings and other actions shall include, without limitation, in addition to the UCC-1 financing statements, (x) delivery to the Agent of the certificates, if any, representing the respective partnership and membership interests in each partnership and limited liability company, the partnership or membership interests in which are being pledged to Agent on behalf of the Lenders pursuant to the Security Documents, and (y) delivery to the Agent of all consents, acknowledgments, and approvals relating in any way to the Security Documents as the Agent in its reasonable discretion determines appropriate, including, without limitation, those consents and approvals set forth in the Loan Agenda with respect to the granting of the Security Documents and the acknowledgment of the interests of the Agent and the Lenders created therein (the “Consents”); and

(b) on or prior to the Funding Date, the Agent shall have received the results of a UCC, tax lien and judgment search in the jurisdictions in which the Borrower, the Borrower Subsidiaries, and the other Loan Parties, respectively, are organized, have assets, or have their chief executive office, and the results of such search shall indicate there are no judgments or Liens not permitted under the Loan Documents.

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5.5 Payment Direction And Authorization. Agent shall have received evidence of such Payment Direction Letters set forth in the Loan Agenda in order to evidence the intended management of the cash flow of the Borrower and the other Loan Parties.

5.6 Litigation. On the Funding Date, there shall not be any actions, suits or proceedings at law or in equity or by or before any governmental instrumentality or other agency or regulatory authority by any entity (private or governmental) pending or, to the best of the Borrower’s Knowledge, threatened with respect to the Loan, the transactions contemplated in the Loan Documents or any documentation executed in connection therewith, or in connection with the Borrower or any other Loan Party, which the Agent shall determine in good faith is likely to have a Material Adverse Effect.

5.7 Formation Documents and Entity Agreements.

(a) On the Funding Date, the Agent shall have received a certificate of the general partner or managing member or manager, as applicable, of the Borrower and each other Loan Party which is a partnership or limited liability company, annexing and certifying as to (a) the Formation Documents of such entity having been duly executed, delivered and filed and remaining in full force and effect and unmodified as of the date of such certificate (and annexing a copy thereof), (b) due authorization, execution and delivery by such entity of the Loan Documents to which it is a party, and (c) such entity being in good standing and authorized to do business in each jurisdiction where the ownership of its assets and operation of its business requires such qualification, as each of the foregoing is set forth in Loan Agenda;

(b) On the Funding Date, the Agent shall have received a certificate of the managing member or manager of each Loan Party which is a limited liability company annexing and certifying as to (a) resolutions of such entity authorizing and approving the transactions contemplated by the Loan Documents, and the execution and delivery thereof by such entity in respect of the documents to which it is a party and on behalf of the other entities in which such limited liability company is a general partner or managing member in respect of any of the Loan Documents, (b) signatures and incumbency of all officers of such limited liability company executing documentation on behalf of such entity or on behalf of any entity as to which such limited liability company is a general partner or managing member, as the case may be, in connection with the transactions contemplated by the Loan Documents, (c) the Formation Documents of such entity having been duly executed, delivered and filed and remaining in full force and effect and unmodified as of the date of such certificate (and annexing copies thereof) and (d) such entity being in good standing and authorized to do business in each jurisdiction where the conduct of its business and ownership of its assets requires such qualification, as each of the foregoing is set forth in the Loan Agenda.

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(c) On the Funding Date, the Agent shall have received a certificate of the secretary of each Loan Party which is a corporation annexing and certifying as to (a) corporate resolutions of such entity authorizing and approving the transactions contemplated by the Loan Documents, and the execution and delivery thereof by such entity in respect of the documents to which it is a party and on behalf of the other entities in which such corporation is a general partner or managing member in respect of any of the Loan Documents, (b) signatures and incumbency of all officers of such corporation executing documentation on behalf of such entity or on behalf of any entity as to which such corporation is a general partner or managing member, as the case may be, in connection with the transactions contemplated by the Loan Documents, (c) the Formation Documents of such entity having been duly executed, delivered and filed and remaining in full force and effect and unmodified as of the date of such certificate (and annexing copies thereof) and (d) such entity being in good standing and authorized to do business in each jurisdiction where the conduct of its business and ownership of its assets requires such qualification, including, as each of the foregoing is set forth in the Loan Agenda.

5.8 Compliance With Law. There are no Legal Requirements which prohibit or adversely limit the capacity or authority of the Borrower to enter into the Facility or any Loan Party to execute the Loan Documents to which it is a party, and perform the obligations of such Person with respect thereto.

5.9 Compliance With Financial Covenants. Agent shall have received an Officer’s Certificate reflecting compliance with the Financial Covenants and the terms and conditions hereof.

5.10 Due Diligence. Agent shall have received and completed a review of such due diligence as the Agent may require with respect to any Collateral, including, without limitation:

(a) Updated title reports and copies of existing owner’s or lender’s title insurance policies with respect to the Individual Properties owned (fee simple or land estate) or ground leased by any Loan Party, or subject to a mortgage or participation interest in any loan held by a Loan Party (the “Title Reports”);

(b) Copies of all notes, mortgages and other loan documents evidencing any Collateral;

(c) Borrower’s certification as to the principal balance and the regularly scheduled principal and interest payments due on all Subsidiary Debt as of March 3, 2011;

(d) Copies of all agreements and restrictions related to the Pledged Securities; and

(e) To the extent available, zoning reports and surveys for each Individual Property.

5.11 Condition of Property. There shall have been no uninsured, unrepaired, or unrestored damage or destruction by fire or otherwise to any of the real or tangible personal property comprising or intended to comprise the Individual Properties which could reasonably be expected to have a Material Adverse Effect.

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5.12 Insurance. To the extent requested by the Agent, the Borrower shall have provided to Agent evidence of the following insurance, each meeting the requirements of the Agent: (i) reasonably satisfactory blanket liability insurance in favor of the Borrower and each of the Borrower Subsidiaries, and physical all-risk insurance; (ii) a reasonably satisfactory report from the third party monitoring the insurance as to the hazard and other insurance on the Individual Properties maintained by the respective owner or tenant thereof, and (iii) a reasonably satisfactory third party contract regarding the monitoring of the insurance to be obtained by tenants under Leases with respect to the Individual Properties.

5.13 Third Party Consents and Agreements. The Agent shall have received the Consents and such other third party consents, control agreements and other agreements as the Agent may require with respect to the Loan.

5.14 Legal Opinions. Agent shall have received and approved legal opinion letters from counsel representing the Borrower and the other Loan Parties which meet Agent’s legal opinion requirements and covering such matters incident to the transactions contemplated herein, as the Agent may reasonably request.

5.15 No Default. There shall not be any Default under any of the Loan Documents.

5.16 Patriot Act/OFAC. The Borrower and each other Loan Party shall have provided all information requested by the Agent and each Lender in order to comply with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) and the OFAC Review Process.

ARTICLE 6
WARRANTIES AND REPRESENTATIONS

The Borrower warrants and represents to Agent and each of the Lenders for the express purpose of inducing Lenders to enter into this Agreement, to make each Loan, and to otherwise complete all of the transactions contemplated hereby that upon the date of each Loan advance and at all times thereafter until the Loan has been repaid and all Obligations have been satisfied as follows:

6.1 Formation. Each of the Borrower and the other Loan Parties has been duly formed and is validly existing and in good standing as a corporation, limited partnership, limited liability company or trust, as the case may be, under the laws of the State of its formation. Each of the Borrower and the other Loan Parties has the requisite power and authority to own its assets and conduct its businesses as currently conducted and owned, and to enter into and perform its obligations under each Loan Document and/or Related Document to which it is a party. Each of the Borrower and the other Loan Parties is in good standing and authorized to do business in each jurisdiction where the ownership of its assets and/or the conduct of its business requires such qualification except where the failure to be so qualified would not have a Material Adverse Effect.

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6.2 Proceedings; Enforceability. Each of the Borrower and the other Loan Parties has taken all requisite action to authorize the execution, delivery and performance by such Person of the Loan Documents and/or the Related Documents to which it is a party. Each Loan Document and the Related Document to which it is a party which is required to be executed and delivered on or prior to the date on which this representation and warranty is being made has been duly authorized, executed and delivered and constitutes the legal, valid and binding obligation of each of the Borrower and the other Loan Parties which is a party thereto, enforceable against each such Person in accordance with its respective terms except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

6.3 Conflicts. Neither the execution, delivery and performance of the Loan Documents and the Related Documents by each of the Borrower and the other Loan Parties or compliance by any such Person with the terms and provisions thereof (including, without limitation, the granting of Liens pursuant to the Security Documents), (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict with or result in any breach of any of the terms, covenants or conditions of, or constitute a default under, or result in the creation or imposition (or the obligation to create or impose) of any Lien (except pursuant to the Security Documents) upon any of the property or assets of any such Person pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement or any other agreement, contract or instrument to which any such Person is a party or by which it or any of its properties or assets is bound or to which it may be subject or (iii) will violate any provision of any Formation Document of any such Person.

6.4 Ownership and Taxpayer Identification Numbers.

(a) All of the partners, owners, stockholders, and members, respectively and as may be applicable, of each of the Borrower and the other Loan Parties (other than the REIT) are listed in Exhibit F. The exact correct name and organizational number(s) and federal employer identification number(s) of the Borrower and the other Loan Parties are accurately stated in Exhibit F.

(b) The Borrower is the owner of all of the ownership interests set forth in Section 3.1.2, above, pledged by it to the Agent, on behalf of the Lenders. Except for such ownership interests and except as shown on Exhibit F, the Borrower does not directly hold any stock, membership, partnership or ownership interest in any other Person.

(c) The applicable Loan Party is each the owner, respectively, of all of the Collateral to be pledged by such Loan Party to the Agent, on behalf of the Lenders, pursuant to the Loan Documents. Except for such ownership interests and except as shown on Exhibit F, the Borrower and the other Loan Parties do not hold any stock, membership, partnership or ownership interest in any other Person.

(d) Except as shown on Exhibit F, no Loan Party or third party, directly or indirectly, owns or controls any interest in any asset relating to the Borrower or the business operations of the Borrower and/or the Borrower Subsidiaries.

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6.5 Litigation. There are no actions, suits or proceedings at law or in equity or by or before any governmental instrumentality or other agency or regulatory authority by any entity (private or governmental) pending or, to the best of the Borrower’s Knowledge, threatened with respect to the Loan, or the transactions contemplated in the Loan Documents or the Related Documents, or any documentation executed in connection therewith, or against the Borrower and/or any of the other Loan Parties which could reasonably be expected to have a Material Adverse Effect.

6.6 Information. All factual information furnished by or on behalf of the Borrower and the other Loan Parties to the Agent and/or any of the Lenders (including, without limitation, all information contained in the Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents or any transaction contemplated herein or therein is, and all other such factual information hereafter furnished by or on behalf of the Borrower and the other Loan Parties to the Agent and/or any of the Lenders will be, true and accurate in all material respects on the date as of which such information is dated or certified and to the best of the Borrower’s Knowledge, not incomplete by omitting to state any fact necessary to make such information not misleading in any material respect at such time in light of the circumstances under which such information was provided.

6.7 Taxes. Each of the Borrower and the other Loan Parties has made all required tax filings and have paid all federal, state and local taxes applicable to them and/or their respective assets, except if contested in accordance with Section 9.1.

6.8 Financial Information. The financial statements of the Borrower and the other Loan Parties provided to the Agent present fairly the financial conditions of each at the dates of such statements of financial condition and the results of operations for the periods covered thereby. Since the dates of the relevant financial statements, no change has occurred which could have or reasonably be expected to have a Material Adverse Effect.

6.9 Management Agreements. Except for the agreements listed on Schedule 6.9 (the “Management Agreements”), there are no other management agreements or asset management agreements respecting the management of the assets of the Borrower and/or any of the other Loan Parties.

6.10 Control Provisions.

(a) Except as set forth on Schedule 6.10, the Borrower controls, directly or indirectly, and without the requirement for consent of any other Person, the management of each Borrower Subsidiary.

(b) Except as set forth on Schedule 6.10, there are no provisions in any limited partnership agreement, operating agreement, certificate of incorporation, bylaws or any other agreement or instrument to which the Borrower or any Borrower Subsidiary is party, under which any Person (other than the Borrower or a Borrower Subsidiary) has the right to exercise the management or control rights, powers or authority currently belonging to the Borrower or any Borrower Subsidiary, except as set forth in any mortgage, deed of trust or similar security agreement encumbering any Individual Property upon exercise of the rights and remedies upon default set forth in any of the foregoing.

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6.11 Formation Documents. The Borrower has delivered or caused to be delivered to the Agent true and complete copies of all Formation Documents of the Borrower and the other Loan Parties, and all amendments thereto as of the date hereof and as of the date of each Loan.

6.12 Related Documents. To the extent not provided for otherwise in this Article 6, true and correct copies of all other Related Documents, together with all amendments and modifications thereto, have been delivered to the Agent, each of which is in full force and effect and, to the best of the Borrower’s Knowledge, no material default has occurred thereunder which could have a Material Adverse Effect.

6.13 Bankruptcy Filings. None of the Borrower or any of the other Loan Parties is contemplating either a filing of a petition under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property, and the Borrower has no Knowledge of any Person contemplating the filing of any such petition against any of the Borrower and/or any of the other Loan Parties.

6.14 Options. No Person holds a right of first refusal or option to purchase with respect to any item of Collateral other than as set forth in any Lease or the Organizational Documents of the Loan Party holding such Collateral.

6.15 Investment Company. None of the Borrower and/or any of the other Loan Parties is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

6.16 Holding Company. None of the Borrower and/or any of the other Loan Parties is a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

6.17 Individual Properties.

6.17.1 Each of the Property Owners possesses such Licenses and Permits issued by the appropriate federal, state, or local regulatory agencies or bodies necessary to own and operate each Individual Property, except where the failure to possess any such License or Permit would not have a Material Adverse Effect. The Property Owners are in material compliance with the terms and conditions of all such Licenses and Permits, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect. All of the Licenses and Permits are valid and in full force and effect, except where the invalidity of such Licenses and Permits or the failure of such Licenses and Permits to be in full force and effect would not result in a Material Adverse Effect. Neither the Borrower nor any of the Property Owners has received any notice of proceedings relating to the revocation or modification of any such Licenses and Permits which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

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6.17.2 Except to the extent the failure of the following to be true would not result in a Material Adverse Effect, (i) the Property Owners have either (x) fee simple title to the Individual Properties, (y) a land estate interest for a specified number of years in the Individual Properties, or (z) a leasehold estate interest in the Individual Properties; (ii) the interests of the Property Owners in the Individual Properties are not subject to any Liens securing the repayment of money except for those securing the repayment of the Subsidiary Debt, as set forth in Schedule 6.17.7, and (iii) each land estate remainderman interest and lessor interest under a Ground Lease is not, directly or indirectly, owned or controlled by a Loan Party, Borrower Subsidiary or other Loan Party;

6.17.3 Except to the extent the failure of the following to be true would not result in a Material Adverse Effect, (i) to the best of Borrower’s Knowledge and except as otherwise disclosed in those reports identified on Schedule 6.17.3, each Individual Property is free of any Hazardous Materials in violation of any Environmental Laws applicable to such property; (ii) none of the Property Owners or Borrower has received any notice of a claim under or pursuant to any Environmental Laws applicable to an Individual Property or under common law pertaining to Hazardous Materials on or originating from any Individual Property; and (iii) none of the Property Owners or Borrower has received any notice from any Governmental Authority claiming any material violation of any Environmental Laws that is uncured or unremediated as of the date hereof;

6.17.4 Except as set forth on Schedule 6.17.4, the mortgages and deeds of trust encumbering the Individual Properties of any Property Owners are not cross-defaulted or cross-collateralized to any Individual Property owned by any other Property Owners;

6.17.5 Except to the extent the failure of the following to be true would not result in a Material Adverse Effect, (i) with respect to the Individual Properties, each Lease is in full force and effect, (ii) except as set forth in Schedule 6.17.5, to the best of Borrower’s Knowledge, none of the Property Owners is in default in the performance of any material obligation under any Lease and Borrower has no Knowledge of any circumstances which, with the passage of time or the giving of notice, or both, would constitute an event of default by any party under any of the Leases, (iii) except as set forth in Schedule 6.17.5, to the best of Borrower’s Knowledge, no tenant is in monetary default beyond thirty (30) days or material non-monetary default under its Lease, (iv) except as otherwise expressly set forth in Schedule 6.17.5, to the best of Borrower’s Knowledge, there are no actions, voluntary or involuntary, pending against any tenant under a Lease under any bankruptcy or insolvency laws, (v) none of the Leases and none of the rents or other amounts payable thereunder has been assigned, pledged or encumbered by any of the Property Owners or any other Person, except in connection with financing secured by the applicable Individual Property (the foregoing schedule, as updated from time to time as provided herein, being referred to herein as the “Lease Schedule”).

6.17.6 Except to the extent the failure of the following to be true would not result in a Material Adverse Effect, (i) each Ground Lease is valid, binding and in full force and effect as against the applicable Property Owners and, to the best of Borrower’s Knowledge, the other party thereto, (ii) except for tenants under the Leases and except in connection with security relating to the Subsidiary Debt, none of the Ground Leases is subject to any pledge, lien, assignment, license or other agreement granting to any third party any interest therein or any right to the use or occupancy of any premises leased thereunder, and (iii) no payments under any Ground Lease are delinquent and no notice of default thereunder has been sent or received by any Loan Party which has not been cured or waived prior to the date hereof, and to the best of Borrower’s Knowledge, there does not exist under any of the Ground Leases any default by any Property Owners or any event which merely with notice or lapse of time or both, would constitute such a default by any of the Property Owners.

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6.17.7 Schedule 6.17.7 accurately details in all material respects the approximate amount, term, and interest rate applicable to all Subsidiary Debt encumbering the Individual Properties (the foregoing schedule, as updated from time to time as provided herein, the “Subsidiary Debt Schedule”). Except as noted on Schedule 6.17.7, no notice of default thereunder has been sent or received by any Loan Party which has not been cured or waived prior to the date hereof, and to the best of the Borrower’s Knowledge, there does not exist with respect to any Subsidiary Debt any default by any Property Owners or any event which merely with notice or lapse of time or both, would constitute such a default by any of the Property Owners. None of the Borrower, any Loan Party, any Borrower Subsidiary, or any other Loan Party owns, directly or indirectly, any material interest in any Subsidiary Debt.

6.17.8 No Borrowing Base Property is or shall at any times be subject to any lien or encumbrance securing any Debt, and no Loan Party (other than the Borrower) shall be liable on any Debt (other than in connection with the Obligations).

6.17.9 Each of the Property Owners is treated as a partnership for federal income tax purposes and does not constitute a publicly traded partnership within the meaning of Section 7704 of the Code.

6.17.10 Each of the Property Owners possesses valid owner’s policy title insurance from title insurers of recognized financial responsibility on each of the Individual Properties in amounts not less than the original purchase price of such properties, and such title insurance is in full force and effect.

6.18 Use of Proceeds. The proceeds of the Loan shall be used solely and exclusively as provided in Section 1.3. No portion of the proceeds of the Loan shall be used by the Borrower directly or indirectly, and whether immediately, incidentally or ultimately for any purpose which would violate or be inconsistent with the provisions of regulations of the Board of Governors of the Federal Reserve System including, without limitation, Regulations G, T, U and X thereof.

6.19 Insurance. The Individual Properties are insured by insurers of recognized financial responsibility against such losses and risks in compliance with the requirements of the Leases and as set forth in Exhibit E, hereto, such insurance maintained by the tenants under the Leases; (ii) the Borrower has a monitoring system in place to periodically verify whether the tenants under the Leases have in place insurance as required by the applicable Lease; and (iii) the Borrower has satisfactory liability insurance in favor of the Borrower and each of the Borrower.

6.20 Deferred Compensation and ERISA. None of the Borrower and/or any of the other Loan Parties has any pension, profit sharing, stock option, insurance or other arrangement or Plan for employees covered by ERISA except as may be designated to Agent in writing by the Borrower from time to time and no Reportable Event has occurred and is now continuing with respect to any such ERISA Plan. The granting of the Loan, the performance by the Borrower and/or of any of the other Loan Parties of their respective obligations under the Loan Documents and/or such Persons’ conducting of their respective operations do not and will not violate any provisions of ERISA.

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6.21 No Default. There is no Default on the part of the Borrower or any of the other Loan Parties under this Agreement or any of the other Loan Documents and no event has occurred and is continuing which would constitute a Default under any Loan Document.

6.22 Other Loan Parties’ Warranties and Representations. The Borrower has no reason to believe that any warranties or representations made in writing by any of the other Loan Parties to the Agent or any of the Lenders are untrue, incomplete or misleading in any material respect.

ARTICLE 7
AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that from the date hereof and so long as any indebtedness is outstanding hereunder, or any of the Loan or other Obligations remains outstanding, as follows:

7.1 Notices. The Borrower shall, with reasonable promptness, but in all events within five (5) days after it has actual Knowledge thereof, notify Agent and each of the Lenders in writing of the occurrence of any act, event or condition which constitutes a Default or Event of Default under any of the Loan Documents. Such notification shall include a written statement of any remedial or curative actions which the Borrower proposes to undertake and/or to cause any of the other Loan Parties to undertake to cure or remedy such Default or Event of Default.

7.2 Financial Statements; Reports; Officer’s Certificates. The Borrower shall furnish or cause to be furnished to Agent as set forth herein from time to time, the following financial statements, reports, certificates, and other information, all in form, manner of presentation and substance acceptable to Agent and each of the Lenders:

(a) Annual Statements. Within one hundred twenty (120) days after the close of each fiscal year of the Borrower, the audited consolidated statements of financial condition of the REIT, the Borrower and all non-consolidated Borrower Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings and statements of changes in financial position for such fiscal year, in each case, commencing with the Fiscal Year ending December 31, 2010, setting forth comparative for the preceding fiscal year, prepared by a public accounting firm reasonably acceptable to the Agent in accordance with GAAP, all in form and manner of presentation acceptable to Agent, such financial statements to include and to be supplemented by such detail and supporting data and schedules as Agent may from time to time reasonably determine, together with an Officer’s Certificate from the Borrower certifying that such financial statements are true, accurate, and complete in all material respects and that no Default or Event of Default has occurred and is continuing; provided, however, the Borrower shall not be required to deliver an item required under this Section if such item is contained in a Form 10-K filed by the REIT with the Securities and Exchange Commission (or any Governmental Authority substituted therefor) and is publicly available to the Agent and the Lenders and the Borrower gives the Agent written notice of the filing thereof.

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(b) Periodic Statements. Within forty-five (45) days after the close of each calendar quarter (including the quarter ending on December 31) commencing March 31, 2011, the following: (i) the consolidated statements of financial condition of the REIT, the Borrower and all non-consolidated Borrower Subsidiaries, internally prepared in accordance with GAAP, consistently applied, as at the end of such quarterly period and the related consolidated statements of income and retained earnings and statements of changes in financial position for such quarterly period and for the elapsed portion of the Fiscal Year ended with the last day of such quarterly period, in each case commencing with the Fiscal Year ending December 31, 2010, setting forth comparative figures for the related periods in the prior fiscal year, subject to normal year-end audit adjustments, all in form and manner of presentation acceptable to Agent, such financial statements to include and to be supplemented by such detail and supporting data and schedules as Agent may from time to time reasonably determine, and (ii) an Officer’s Certificate from the Borrower certifying that such financial statements are true, accurate, and complete in all material respects and that no Default or Event of Default has occurred and is continuing; provided, however, the Borrower shall not be required to deliver an item required under this Section if such item is contained in a Form 10-Q filed by the REIT with the Securities and Exchange Commission (or any Governmental Authority substituted therefor) and is publicly available to the Agent and the Lenders and the Borrower gives the Agent written notice of the filing thereof.

(c) Borrowing Base/Compliance Certificates. Within forty-five (45) days after the close of each quarterly Accounting period in each Fiscal Year of the Borrower commencing March 31, 2011, a Borrowing Base Certificate and Compliance Certificates in the form of Exhibit G-1, Exhibit G-2 and Exhibit G-3 annexed hereto, together with an Officer’s Certificate from the Borrower providing and otherwise certifying with respect to the following:

(i) the compliance with the Financial Covenants and the calculation of the Borrowing Base, with such supporting detail as is deemed necessary by the Agent to verify the calculations incorporated therein;

(ii) any changes to the Subsidiary Debt Schedule, including, without limitation, (a) any prepayments made on any Subsidiary Debt since the date of the then prior Officer’s Certificate, (b) specific identification of all Subsidiary Debt which matures within the twelve (12) months following the date of the Officer’s Certificate, (c) any refinancing of such Subsidiary Debt which has occurred (or for which an application has been made or a loan commitment received) since the date of the then prior Officer’s Certificate, together with a summary of the use and disbursement of the proceeds thereof, and (d) any defaults then existing under any Subsidiary Debt not included in a prior Officer’s Certificate or Subsidiary Debt Schedule, with such supporting detail as is deemed necessary by the Agent to verify the calculations incorporated therein;

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(iii) A listing of any material assets (a) sold by the Borrower, the Borrower Subsidiaries, and/or any of the other Loan Parties since the date of then prior Officer’s Certificate, together with specific detail as to the use and disbursement of the proceeds of the sale, and (b) as to which an agreement has been entered into since the date of the then prior Officer’s Certificate for the sale thereof, together with the primary terms of such agreement;

(iv) a listing of any material assets acquired, or as to which an agreement to acquire has been entered into, by the Borrower, the Borrower Subsidiaries, and/or any of the other Loan Parties since the date of then prior Officer’s Certificate, together with the primary terms of such acquisition or agreement;

(v) except as disclosed in such Officer’s Certificate, to the extent of the knowledge of such officer, a certification that all insurance premiums in respect of insurance policies covering the properties owned (directly or indirectly) by the Property Owners have been paid or are not past due more than sixty (60) days, all debt service payments in respect of any Subsidiary Debt of have been made and all real estate taxes and other impositions relating to any Property Owner or its related assets have been paid; and

(vi) a summary of the status of any pending insurance claims or condemnation award proceedings.

(d) Data Requested. Within a reasonable period of time and from time to time such other financial data or information as Agent may reasonably request with respect to the Individual Properties, the Borrower, the Borrower Subsidiaries, and/or any of the other Loan Parties, including, but not limited to, rent rolls, aged receivables, aged payables, leases, budgets, forecasts, reserves, cash flow projections, deposit accounts, mortgage information, physical condition of the Borrower’s Investments.

(e) Tax Returns. To the extent prepared and filed, upon Agent’s request, copies of all federal and state tax returns of the Borrower and any of the other Loan Parties.

(f) Debt Notices. Concurrently with the giving thereof, and within ten (10) Business Days of receipt thereof, copies of all notices, other than routine correspondence, given or received by the Borrower, or any Loan Party with respect to any Subsidiary Debt.

(g) Entity Notices. Concurrently with the issuance thereof, copies of all written notices (excluding routine correspondence) given to the partners, owners, stockholders, and/or members, respectively, of the REIT, the Borrower and/or any of the other Loan Parties.

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(h) Notice of Distributions. Concurrently with the giving thereof, and within ten (10) Business Days of receipt thereof, copies of all notices of Distributions to the extent given by any Borrower Subsidiaries to the Borrower.

(i) Property Acquisition or Sale. Within ten (10) Business Days of receipt thereof, copies of all contracts or agreements in any way relating to a sale or acquisition of any material asset by the Borrower, and Borrower Subsidiary, and/or any of the other Loan Parties, along with a pro forma Compliance Certificate with respect to the Financial Covenants after giving effect to the proposed transaction.

(j) Third Party Default Notices. Immediately upon notice or receipt thereof by the Borrower and/or any of the other Loan Parties, copies of all notices of default, other non-performance, and/or exercise (or intended exercise) relating in any way to any one or more of the Related Documents.

(k) Notice of Litigation. Promptly, and in any event within ten (10) Business Days after the Borrower obtains Knowledge thereof, written notice of any pending or, to the best of the Borrower’s Knowledge, threatened action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency or regulatory authority by any entity (private or governmental) relating in any way to the Loan, the transactions contemplated in the Loan Documents (including, without limitation, with regard to all Distributions), the Related Documents, or relating to the Borrower and/or any of the other Loan Parties, which could reasonably be expected to have a Material Adverse Effect.

(l) Notice of Hazardous Materials Promptly, and in any event within ten (10) Business Days after the Borrower obtains Knowledge thereof, written notice of (i) any Release (as defined in the Environmental Indemnity) or Threat of Release (as defined in the Environmental Indemnity) of Hazardous Materials on, in, under or affecting all or any portion of any Individual Property or (ii) the violation of any Environmental Law, in each case which could reasonably be expected to have a Material Adverse Effect.

(m) Patriot Act Information. From time to time and promptly upon each request, information identifying the Borrower or any other Loan Party as a Lender may request in order to comply with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

7.3 Existence. The Borrower shall do or cause to be done all things necessary to (i) preserve, renew and keep in full force and effect (x) the existence of the Loan Parties and the Borrower Subsidiaries and (y) the material rights, licenses, permits and franchises of the Loan Parties and the Borrower Subsidiaries, (ii) comply with all laws and other Legal Requirements applicable to it and its assets, business and operations and those of the Loan Parties and the Borrower Subsidiaries, and (iii) to the extent applicable, at all times maintain, preserve and protect all material franchises and trade names and all the remainder of its property used or useful in the conduct of its business, and keep its assets in good working order and repair, ordinary wear and tear excepted, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto.

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7.4 Payment of Taxes. The Borrower shall duly pay and discharge, and cause the Loan Parties and each Borrower Subsidiary to duly pay and discharge, before the same shall become overdue, all taxes, assessments, impositions, and other governmental charges payable by it or with respect to the Individual Properties, to the extent that same are not paid by the tenants under the respective Leases, except if contested in accordance with Section 9.1.

7.5 Insurance; Casualty, Taking.

7.5.1 The Borrower shall at all times maintain or cause the appropriate Person to maintain in full force and effect the following insurance: (i) to the best of the Borrower’s Knowledge, the Individual Properties shall be insured by insurers of recognized financial responsibility against such losses and risks in compliance with the Leases or, if such Lease does not require the tenant to maintain insurance for the entire Individual Property, the requirements set forth in Exhibit E hereto; (ii) the Borrower shall have a monitoring system in place to periodically verify whether the tenants under the Leases have in place insurance as required by the applicable Lease; and (iii) the Borrower shall have satisfactory liability insurance in favor of the Borrower and each of the Borrower Subsidiaries in compliance with the requirements in effect of the date hereof.

7.5.2 In the event of any damage or destruction to any Individual Property (or to the extent now or hereafter applicable, any Collateral) by reason of fire or other hazard or casualty, the Borrower shall give immediate written notice thereof to Agent. If there is any condemnation for public use of any Individual Property (or to the extent now or hereafter applicable, any Collateral), the Borrower shall give immediate written notice thereof to Agent. Further, the Borrower shall upon the request of the Agent provide to the Agent with a report as to the status of any insurance adjustment, condemnation claim, or restoration resulting from any casualty or taking.

7.6 Inspection. The Borrower shall cause the Borrower Subsidiaries to permit the Agent and the Lenders and its/their agents, representatives and employees to inspect the Collateral at reasonable hours upon reasonable notice.

7.7 Loan Documents. The Borrower (i) shall observe, perform and satisfy all the terms, provisions, covenants and conditions to be performed by it under, and to pay when due all costs, fees and expenses, and other Obligations of the Borrower to the extent required under, the Loan Documents and (ii) shall cause the other Borrower Subsidiaries and other Loan Parties to observe, perform and satisfy all the terms, provisions, covenants and conditions to be performed by such Person under, and to pay when due all costs, fees and expenses, and other Obligations to the extent required under, the Loan Documents.

7.8 Further Assurances. The Borrower shall and shall cause the Borrower Subsidiaries and other Loan Parties to execute and deliver to the Agent and the other Lenders such documents, instruments, certificates, assignments and other writings, and do such other acts, necessary or desirable in the reasonable judgment of the Agent, to evidence, preserve and/or protect the Collateral at any time securing or intended to secure the Obligations and do and execute all and such further lawful acts, conveyances and assurances as the Agent may reasonably require for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents.

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7.9 Books and Records. The Borrower shall and shall cause the Loan Parties and the Borrower Subsidiaries and other Loan Parties to keep and maintain in accordance with GAAP (or such other Accounting basis reasonably acceptable to the Agent), proper and accurate books, records and accounts reflecting all of the financial affairs of the Borrower and such other Persons and all items of income and expense in connection with their respective business and operations and in connection with any services, equipment or furnishings provided in connection with the operation of the business of the Borrower and such Persons, whether such income or expense is realized thereby or by any other Person. The Agent shall have the right, not more than once each quarter (unless an Event of Default shall have occurred and be continuing in which case as often as the Agent shall determine), during normal business hours and upon reasonable notice, to examine such books, records and accounts of the Borrower, and the other Loan Parties at the office of the Person maintaining such books, records, and accounts and to make such copies or extracts thereof as the Agent shall desire. The Borrower shall maintain all of its business records at the address specified at the beginning of this Agreement, subject to change upon advance written notification to the Agent. The Agent may discuss the financial and other affairs of the Borrower and/or the other Loan Parties with any of their respective partners, owners, and any accountants (as to accountants, prior to the occurrence of an Event of Default and following the cure of any Event of Default, upon prior approval of the Borrower, not to be unreasonably withheld, and at the cost and expense of the Agent and the Lenders) hired by the Borrower, it being agreed that Agent and each of the Lenders shall use best efforts to not divulge information obtained from such examination to others except in connection with Legal Requirements and in connection with administering the Loan, enforcing its rights and remedies under the Loan Documents and in the conduct, operation and regulation of its banking and lending business (which may include, without limitation, the transfer of the Loan or of participation interests therein). Any assignee or transferee of the Loan, co-lender, or any holder of a participation interest in the Loan shall be entitled to deal with such information in the same manner and in connection with any subsequent transfer of its interest in the Loan or of further participation interests therein.

7.10 Business and Operations. The Borrower shall (and shall cause the Loan Parties and the Borrower Subsidiaries to) (i) continue to engage in the type of businesses presently conducted by them as of the Closing Date, respectively and otherwise permitted to be conducted by the REIT and the Borrower, and (ii) be qualified to do business and in good standing under the laws of each jurisdiction, and otherwise to comply with all Legal Requirements, as and to the extent the same are required for the ownership, maintenance, management and operation of the assets of such Person except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect.

7.11 Title. The Borrower shall and shall cause the Borrower Subsidiaries and each Loan Party to warrant and defend (x) the title to each item of Collateral owned by such Person and every part thereof, subject only to the Liens (if any) permitted hereunder, and (y) the validity and priority of the Liens and security interests held by the Agent pursuant to the Loan Documents, in each case against the claims of all Persons whomsoever. The Borrower shall be responsible to reimburse Agent and the Lenders for any losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) incurred by the Agent and/or any of the Lenders if an interest in any item of Collateral, other than as permitted hereunder, is claimed by another Person.

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7.12 Estoppel. The Borrower shall (and shall cause the Borrower Subsidiaries to), within ten (10) days after a request therefor from the Agent, which request shall not be made by Agent more than once each quarter during each Fiscal Year, furnish to the Agent a statement, duly acknowledged and certified, setting forth (i) the amount then owing by the Borrower in respect of the Obligations, (ii) the date through which interest on the Loan has been paid, (iii) any offsets, counterclaims, credits or defenses to the payment by the Borrower or any Borrower Subsidiary to the Obligations and (iv) whether any written notice of Default from Agent to the Borrower or any of the Borrower Subsidiaries is then outstanding and acknowledging that this Agreement and the other Loan Documents are in full force and effect and unmodified, or if modified, giving the particulars of such modification.

7.13 ERISA. The Borrower shall (and shall cause each of the Loan Parties and the Borrower Subsidiaries to) as soon as possible and, in any event, within ten (10) days after the Borrower, the Loan Parties, any Borrower Subsidiary or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following which could have or reasonably be expected to have a Material Adverse Effect, deliver to Agent a certificate of the an executive officer of the Borrower setting forth details as to such occurrence and the action, if any, that the Borrower, the Loan Parties, or applicable Borrower Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by such the Borrower, the Loan Parties, Borrower Subsidiary, the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with respect thereto: (i) that a Reportable Event has occurred; (ii) that an accumulated funding deficiency has been incurred or an application may be or has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan; (iii) that a contribution required to be made to a Plan has not been timely made; (iv) that a Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA; (v) that a Plan has an Unfunded Current Liability giving rise to a lien under ERISA or the Code; (vi) that proceedings may be or have been instituted to terminate or appoint a trustee to administer a Plan; (vii) that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan; (viii) that the Borrower, the Loan Parties, Borrower Subsidiary, or ERISA Affiliate will or may incur any liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA; (ix) or that the Borrower, the Loan Parties, or Borrower Subsidiary may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(l) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2) of ERISA). The Borrower shall (and shall cause the Loan Parties and the Borrower Subsidiaries to) deliver to Agent a complete copy of the annual report (Form 5500) of each Plan required to be filed with the Internal Revenue Service. In addition to any certificates or notices delivered to Agent pursuant to the first sentence hereof, copies of any material notices received by the Borrower, the Loan Parties, a Borrower Subsidiary, or any ERISA Affiliate with respect to any Plan shall be delivered to Agent no later than ten (10) days after the date such report has been filed with the Internal Revenue Service or such notice has been received by Borrower, the Loan Parties, or Borrower Subsidiary or ERISA Affiliate, as applicable.

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7.14 Depository Accounts. The Agent and the Borrower shall negotiate in good faith regarding the establishment by the Borrower and each of the other Loan Parties of operating and other depository accounts, with the Agent (or any successor thereto) (singly and collectively, including the Depository Accounts, the “Borrower Accounts”), and the completion of Cash Management Agreements with respect to the use and disbursement of funds in any the Borrower Account. Each of the Borrower Accounts shall be subject to the Pledge and Security Agreement.

7.15 Cash Flow; Payment Direction Letters. To the extent Borrower Accounts and Cash Management Agreements are established under Section 7.14 above, some or all of the following may be required:

7.15.1 The Borrower agrees that appropriate procedures satisfactory to the Agent may be put in place such that subject to any limitations provided for with respect to any Subsidiary Debt: (i) any Distributions and other revenues due or payable to the Loan Parties and/or any Borrower Subsidiary shall be paid directly in to the designated Depository Account in the name of the Borrower or as otherwise directed by the Agent, and (ii) any Distributions by any Borrower Subsidiary payable to the Borrower and/or the Loan Parties shall be directly deposited in the designated Depository Account in the name of the Borrower or as otherwise directed by the Agent. Further, subject to any limitations provided for with respect to any Subsidiary Debt, after the occurrence and during the continuance of an Event of Default, Agent shall have the right to receive any and all such Distributions or other revenues and make application thereof to the Obligations.

7.15.2 The use and disbursement of all funds in the Depository Accounts and the Borrower Accounts shall be subject to the terms and provisions hereof and the Cash Management Agreement.

7.15.3 The Borrower agrees that to the extent that the Borrower, the Loan Parties, any Borrower Subsidiary or any other Loan Party receives directly any Distributions or revenues or other payments which are required to be deposited as provided for herein, the Borrower shall, and shall cause such Person to deposit such funds in the applicable designated Depository Account as directed by the Agent.

7.15.4 The Borrower shall (and shall cause the Loan Parties and the Borrower Subsidiaries) to maintain in place during the term of the Loan such direction letters and agreements as the Agent may from time to time require in order to effectuate the terms and provisions hereof relating to the management of the cash flow of such Persons (together with the Consents (to the extent that the Consents provide for the management of cash flow), the “Payment Direction Letters.

7.15.5 the Borrower shall (and shall cause the other Loan Parties to) keep in effect all Payment Direction Letters, including, without limitation, any replacements, substitutions, or renewals thereof as the Agent shall reasonably deem appropriate from time to time.

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7.16 Distributions. Subject to the requirements set forth in clause (h)(xvi) of the definition of “Single-Purpose Entity” contained herein, the Borrower shall cause the Borrower Subsidiaries to make the maximum amount of all Distributions to the Borrower at the earliest opportunity permitted under the respective Formation Documents of each of the Borrower Subsidiaries, but not less often than quarterly and shall take all actions necessary (and as may be directed by the Agent) to preserve and maintain the Distribution scheme provided for herein.

7.17 Costs and Expenses. The Borrower shall pay all costs and expenses (excluding salaries or wages of employees of Agent) reasonably incurred by Agent in connection with the implementation and syndication of the Loan and the administration of the Loan, and reasonably incurred by the Agent or any of the Lenders in connection with the enforcement of the Agent’s and Lenders’ rights under the Loan Documents, including, without limitation, legal fees and disbursements, appraisal fees, inspection fees, plan review fees, travel costs and fees and out-of-pocket costs of independent engineers and consultants. The Borrower’s obligations to pay such costs and expenses shall include, without limitation, all attorneys’ fees and other costs and expenses for preparing and conducting litigation or dispute resolution arising from any breach by the Borrower or the Loan Parties of any covenant, warranty, representation or agreement under any one or more of the Loan Documents. Unless an Event of Default has occurred and is then continuing, the Agent shall use its best efforts to notify the Borrower prior to the incurrence of any such cost or expense if the aggregate amount of such costs and expenses in any one calendar year will exceed $10,000.00; provided, however, that the failure shall provide such notice shall not affect in any manner whatsoever on the Borrower’s obligations hereunder.

7.18 Appraisals.

7.18.1 Appraisal. Agent shall have the right at its option, from time to time, to order an appraisal of one or more of the Individual Properties prepared at Agent’s direction by an appraiser selected by Agent (the “Appraisal”). An appraiser selected by Agent shall be an MAI member with appropriate experience appraising commercial properties in the respective area(s) of the Individual Properties and otherwise qualified pursuant to provisions of applicable laws and regulations under and pursuant to which Agent operates).

7.18.2 Costs of Appraisal. The Borrower shall pay for the costs of each updated Appraisal only after the occurrence and during the continuance of an Event of Default, or if the Agent is granted a mortgage or deed of trust on a on an Individual Property pursuant to Section 7.21.1; provided, however, Borrower shall not be required to pay for more than one appraisal per year, per Individual Property unless an Event of Default shall be in existence.

7.19 Indemnification. The Borrower shall at all times, both before and after repayment of the Loan, at its sole cost and expense defend, indemnify, exonerate and save harmless Agent and each of the Lenders and all those claiming by, through or under Agent and each of the Lenders (“Indemnified Party”) (to the extent not paid by the Borrower in this Section 7.19 or under the applicable provisions of this or any other Loan Document) against and from all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind whatsoever, including, without limitation, attorneys’ fees and experts’ fees and disbursements, which may at any time (including, without limitation, before or after discharge or foreclosure of the Security Documents) be imposed upon, incurred by or asserted or awarded against the Indemnified Party and arising from or out of:

(a) any liability for damage to person or property arising out of any violation of any Legal Requirement with respect to the Borrower, any other Loan Party or any Individual Property, or

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(b) any and all liabilities, damages, penalties, costs, and expenses, relating in any manner to any brokerage or finder’s fees in respect of the Loan, or

(c) as a result of litigation that may arise in connection with Borrower’s activities, or

(d) the payment of any fees to any Loan Party or any manager or owner of the Borrower; or

(e) any act, omission, negligence or conduct at any Individual Property, or arising or claimed to have arisen, out of any act, omission, negligence or conduct of the Borrower or any tenant, occupant or invitee thereof which is in any way related to any Individual Property.

Notwithstanding the foregoing, an Indemnified Party shall not be entitled to indemnification in respect of claims arising from acts of its own gross negligence or willful misconduct to the extent that such gross negligence or willful misconduct is determined by the final judgment of a court of competent jurisdiction, not subject to further appeal, in proceedings to which such Indemnified Party is a proper party.

7.20 RESERVED.

7.21 Future Collateral Obligations. The Borrower acknowledges that the determination by the Agent as to the Collateral was based upon an analysis of the assets owned by the Borrower and the Borrower Subsidiaries, and the assets owned by Loan Parties that are parties to the Security Documents. The Borrower shall (and shall cause each of the other Loan Parties to) agree to the following undertaking:

7.21.1 At the option of the Agent, the applicable Property Owner (to the extent same is a Borrower Subsidiary) shall grant to the Agent, on behalf of the Lenders, a mortgage or deed of trust interest in and to each Individual Property which is a Borrowing Base Asset; provided, however, in the event of the incurrence of Permitted Debt on the Individual Property, the Agent shall release the said mortgage or deed of trust to the refinanced loan subject to the payment of any amount required under Section 2.5.1(a);

7.22 Replacement Documentation. Upon receipt of an affidavit of an officer of Agent as to the loss, theft, destruction or mutilation of the Note or any other Security Document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Note or other Security Document, the Borrower will issue, in lieu thereof, a replacement Note or other security document in the same principal amount and otherwise of like tenor upon receipt by the Borrower of a suitable indemnity.

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7.23 Other Covenants. The Borrower hereby represents and warrants that no Collateral is in the possession of any third party bailee (such as at a warehouse). In the event that the Borrower and/or any of the other Loan Parties, after the date hereof, intends to store or otherwise deliver any Collateral or other personal property in which the Agent has been granted a security interest to such a bailee, then the Borrower shall receive the prior written consent of the Agent and such bailee must acknowledge in writing that the bailee is holding such Collateral or such other personal property for the benefit of the Agent and the Lenders.

7.24 Related Documents. The Borrower will, or will cause each Borrower Subsidiary and the Loan Parties to, comply with the terms and provisions of all of the Related Documents.

7.25 Reserved.

7.26 Financial Covenants. The Borrower shall comply with the following financial covenants:

7.26.1 Coverage Ratios.

(a) Certain Definitions.

(i) “Calculation Date” shall mean the last day of each calendar quarter commencing with December 31, 2010.

(ii) “Calculation Period” shall mean each successive twelve (12) month period ending on a Calculation Date.

(iii) “Consolidated Debt Service” shall mean the sum of the aggregate Pro Rata regularly scheduled actual principal and interest paid or payable respecting all Debt of the REIT, the Borrower and their Subsidiaries during the subject Calculation Period.

(iv) “Consolidated Debt Service Coverage” shall mean the ratio for the Calculation Period of: (A) Adjusted Earnings to (B) Consolidated Debt Service

(v) “Fixed Charges” shall mean the aggregate of the Borrower’s and the REIT’s Pro Rata share of all (a) interest expenses, (b) regularly scheduled principal amortization payments (other than any final “balloon” payments due at maturity) on all Debt of the Borrower and its Subsidiaries, (c) preferred dividend payments or required Distributions (other than Distributions by the REIT to common equity holders) paid or payable by the REIT, (d) ground lease payments unless already deducted from Adjusted Earnings, and (e) tax expenses for the Borrower and its Subsidiaries, all of the foregoing as determined in accordance with GAAP and in each instance excluding amount due under the Repo Agreement.

(vi) “Fixed Charge Coverage” shall mean the ratio of (a) Adjusted Earnings to (b) Fixed Charges.

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(b) Minimum Consolidated Debt Service Coverage. The Consolidated Debt Service Coverage for each Calculation Period determined on each Calculation Date shall be not less than 1.50:1. The compliance with the Consolidated Debt Service Coverage covenant shall be tested by the Agent on the Calculation Date with results based upon the most recent Calculation Period results, as reasonably determined by the Agent in a manner consistent with the procedures and methods utilized by the Agent in analyzing the financial information provided by the Borrower prior to closing. If such Consolidated Debt Service Coverage covenant shall not be satisfied on any Calculation Date, the Borrower shall prepay a sufficient amount of principal outstanding on the Loan such that if such principal reduction had been made on the first day of the Calculation Period the Debt Service Coverage covenant would have been satisfied. It shall be an Event of Default if the Borrower fails to make such a prepayment not later than the first to occur of: (i) ten (10) Business Days after notice from Agent to the Borrower properly requesting the payment, or (ii) if the Borrower has failed to give Agent sufficient reports to enable Agent to make the necessary calculations, forty-five (45) days following the applicable Calculation Date, provided the Borrower shall have an additional five (5) days to supply additional information to the Agent from the date the Agent notifies the Borrower that the initial reports have been deemed insufficient by the Agent.

(c) RESERVED.

(d) Minimum Fixed Charge Coverage. The Fixed Charge Coverage for each Calculation Period determined on each Calculation Date beginning for the Calculation Period ending on December 31, 2010 shall be not less than 1.25:1. The compliance with the Fixed Charge Coverage covenant shall be tested by the Agent on the Calculation Date with results based upon the most recent Calculation Period results, as reasonably determined by the Agent in a manner consistent with the procedures and methods utilized by the Agent in analyzing the financial information provided by the Borrower prior to closing. If such Fixed Charge Coverage covenant shall not be satisfied on any Calculation Date, the Borrower shall prepay a sufficient amount of principal outstanding on the Loan such that if such principal reduction had been made on the first day of the Calculation Period the Fixed Charge Coverage covenant would have been satisfied. It shall be an Event of Default if the Borrower fails to make such a prepayment not later than the first to occur of: (i) ten (10) Business Days after notice from Agent to the Borrower properly requesting the payment, or (ii) if the Borrower has failed to give Agent sufficient reports to enable Agent to make the necessary calculations, forty-five (45) days following the applicable Calculation Date, provided the Borrower shall have an additional five (5) days to supply additional information to the Agent from the date the Agent notifies the Borrower that the initial reports have been deemed insufficient by the Agent

7.26.2 Consolidated Leverage Ratio. The quotient resulting from dividing (i) the sum of (1) the Borrower’s and the REIT’s Pro Rata share of the aggregate amount of all Debt respecting the Borrower, its Subsidiaries and Investments (including, without limitation, the outstanding balance of the Loan), by (ii) the REIT’s Total Asset Value, all as reasonably determined by the Agent in a manner consistent with the procedures and methods utilized by the Agent in analyzing the financial information provided by the Borrower prior to closing, shall at all times be less than fifty five (55%) percent.

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The compliance with the Consolidated Leverage Ratio covenant shall be tested by the Agent on the Calculation Date with results based upon then current financial information, as reasonably determined solely by the Agent. If such Consolidated Leverage Ratio covenant shall not be satisfied on any Calculation Date, the Borrower shall prepay a sufficient amount of principal outstanding on the Loan such that if such principal reduction had been made on the Calculation Date the Consolidated Leverage Ratio covenant would have been satisfied on such Calculation Date. It shall be an Event of Default if the Borrower fails to make such a prepayment not later than the first to occur of: (i) ten (10) Business Days after Notice from Agent to the Borrower properly requesting the payment, or (ii) if the Borrower has failed to give Agent and each of the Lenders sufficient reports to enable Agent to make the necessary calculations, forty-five (45) days following the applicable Calculation Date, provided the Borrower shall have an additional five (5) days to supply additional information to the Agent from the date the Agent notifies the Borrower that the initial reports have been deemed insufficient by the Agent.

7.26.3 Minimum Net Worth. The Net Worth of the REIT shall at all times be equal to or greater than $250,000,000.00, plus 75% of the amount of any net proceeds received by the REIT in connection with any securities issuances or offerings consummated from and after the Closing Date. The compliance with the Minimum Net Worth covenant shall be tested by the Agent on each Calculation Date. If such Minimum Net Worth covenant shall not be satisfied on any Calculation Date, the Borrower shall prepay a sufficient amount of principal outstanding on the Loan such that if such principal reduction had been made on the Calculation Date the Minimum Net Worth covenant would have been satisfied on such Calculation Date. It shall be an Event of Default if the Borrower fails to make such a prepayment not later than the first to occur of: (i) ten (10) Business Days after Notice from Agent to the Borrower properly requesting the payment, or (ii) if the Borrower has failed to give Agent and each of the Lenders sufficient reports to enable Agent to make the necessary calculations, forty-five (45) days following the applicable Calculation Date, provided the Borrower shall have an additional five (5) days to supply additional information to the Agent from the date the Agent notifies the Borrower that the initial reports have been deemed insufficient by the Agent.

7.26.4 Dividend Payout. Distributions or dividends made by the Borrower to the REIT, and by the REIT to its owners, shall not exceed 100% of Adjusted Earnings, to be calculated on a trailing twelve-month basis, provided however, distributions or dividends may be paid to the extent necessary to maintain the status of the REIT as a real estate investment trust.

7.26.5 Minimum Liquidity. The sum of all of the REIT’s Liquid Assets (excluding, however, the Liquid Assets of any Borrower Subsidiary as to which there exists a default or event of default on any Debt of such Borrower Subsidiary) must at all times be at least $10,000,000.00, as evidenced by the REIT’s annual and quarterly SEC filings. If such Minimum Liquidity shall not be satisfied on any date of testing, the REIT shall arrange for an infusion of Liquid Assets in an amount necessary to satisfy the requirements of this Section 7.28.5. It shall be an Event of Default if the REIT fails to arrange for any required additional Liquid Assets not later than ten (10) Business Days after Notice from Agent to the Borrower notifying the Borrower of the noncompliance.

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ARTICLE 8
NEGATIVE COVENANTS

The Borrower covenants and agrees that from the date hereof and so long as any Obligations remain outstanding hereunder, the Borrower shall not (and shall not suffer or permit the other Loan Parties and/or the Borrower Subsidiaries to):

8.1 No Changes to the Borrower and other Loan Parties. Without the prior written consent of the Agent, which consent will not be unreasonably withheld, after not less than thirty (30) days’ prior written notice (with reasonable particularity of the facts and circumstances attendant thereto):(i) change its jurisdiction of organization, (ii) change its organizational structure or type, (iii) change its legal name, or (iv) change the organizational number (if any) assigned by its jurisdiction of formation or its federal employer identification number (if any).

8.2 Restrictions on Liens. Create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible, including, without limitation, the Individual Properties), whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable with recourse) or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute, or grant rights with respect to, or otherwise encumber or create a security interest in, such property or assets (including, without limitation, any item of Collateral) or any portion thereof or any other revenues therefrom or the proceeds payable upon the sale, transfer or other disposition of such property or asset or any portion thereof, or permit or suffer any such action to be taken, except the following (singly and collectively, “Permitted Liens”):

8.2.1 Liens created by the Loan Documents;

8.2.2 Liens for taxes, assessments or other governmental charges not yet delinquent or which are being diligently contested in good faith and by appropriate proceedings, if (x) reasonable reserves in an amount not less than the tax, assessment or governmental charge being so contested shall have been established in a manner reasonably satisfactory to the Agent or deposited in cash (or cash equivalents) with the Agent to be held during the pendency of such contest, or such contested amount shall have been duly bonded in accordance with applicable law, (y) no risk of sale, forfeiture or loss of any interest in any Individual Property or the Collateral or any part thereof arises during the pendency of such contest and (z) such contest does not have and could not reasonably be expected to have a Material Adverse Effect;

8.2.3 Liens in respect of property or assets imposed by law, which were incurred in the ordinary course of business and do not secure Debt, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of any property or assets or have, and could not reasonably be expected to have, a Material Adverse Effect or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien;

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8.2.4 Liens existing as of the Closing Date in favor of the holders of the Subsidiary Debt;

8.2.5 A Lien on a Borrower Subsidiary asset (other than on a Borrowing Base Asset) which may be granted to secure Permitted Debt; and

8.2.6 To the extent that the Borrower or any Borrower Subsidiary or any Loan Party acquires any other asset, any Lien as to which the acquisition of such asset is subject.

8.3 Consolidations, Mergers, Sales of Assets, Issuance and Sale of Equity. (i) Dissolve, terminate, liquidate, consolidate with or merge with or into any other Person, (ii) issue, sell, lease, transfer or assign to any Persons or otherwise dispose of (whether in one transaction or a series of transactions) any portion of its assets (whether now owned or hereafter acquired), including, without limitation, any securities, membership or partnership interests, or other interests of any kind in any other Loan Party or Borrower Subsidiary, directly or indirectly (whether by the issuance of rights of, options or warrants for, or securities convertible into, any such security, membership or partnership interests or other interests of any kind), (iii) withdraw from or resign as general partner or managing member of any Person, including, without limitation, any withdrawal or resignation of: the REIT as general partner of the Borrower, (iv) permit another Person to merge with or into it, or (v) take any action which could have the effect, directly or indirectly, of diluting the economic interest of any Loan Party in any of the Collateral; except the following:

8.3.1 Transfers pursuant to the Security Documents and other agreements in favor of Agent on behalf of the Lenders;

8.3.2 Transfers or mergers to facilitate a Permitted Investment (to the extent required, the Agent shall release any security interest which it may have thereon to effectuate such transfer or merger);

8.3.3 Mergers, consolidations, transfers and sales between and among Loan Parties of partnership interests, membership interests or capital stock, so long as after giving effect to any such merger, consolidation, transfer or sale, the Agent shall have a security interest, directly or through its security interest in the partnership interests, membership interests or capital stock of another Loan Party, in the partnership interests, membership interests or capital stock of each Borrower Subsidiary which is the survivor of such merger or consolidation or the recipient of such partnership interests, membership interests or capital stock transferred and/or sold, provided that in no event may any such merger, consolidation, transfer or sale cause a Change of Control or otherwise adversely affect the interests of the Agent and/or the Lenders, as determined solely by the Agent;

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8.3.4 Sales of any Individual Property or other Investment or the ownership interest of the Borrower in any Property Owner or, with the prior consent of the Agent; provided (a) the Agent receives the Mandatory Principal Payment (if any) required under Section 2.5.1(a) above, (b) the Borrower submits to the Agent an Officer’s Certificate reflecting a pro-forma calculation that such sale will not result in a failure to comply with any Financial Covenants considering the consequences of the sale (to the extent required, the Agent shall release any security interest which it may have thereon to effectuate such sale);

8.3.5 Sales or dispositions in the ordinary course of business of worn, obsolete or damaged items of personal property or fixtures which are suitably replaced (to the extent required, the Agent shall release any security interest which it may have thereon to effectuate such sale or disposition);

8.3.6 Leases to the extent provided for herein;

8.3.7 The issuance of equity interests in the Borrower or the REIT, provided no Change in Control shall occur; and

8.3.8 Transactions, whether outright or as security, for which Agent’s prior written consent has been obtained.

8.4 Restrictions on Debt. Create, incur or assume any Debt, (ii) enter into, acquiesce, suffer or permit any amendment, restatement or other modification of the documentation evidencing and/or securing any Debt under which it is an obligor, or (iii) increase the amount of any Debt existing as of the Closing Date; except with respect to the following (singly and collectively, “Permitted Debt”):

8.4.1 The Obligations;

8.4.2 The following Debt existing as of the Closing Date in the amount disclosed to the Agent hereunder:

(a) the Subsidiary Debt (none of which is recourse to the Borrower, any Guarantor or any owner of a Borrowing Base Asset, except for the type of recourse obligation set forth in Section 8.4.3, below);

(b) Debt described in Schedule 8.4.2(b) annexed hereto;.

8.4.3 With respect to any Debt incurred by any Borrower Subsidiary, obligations under (i) limited guaranties by the Borrower as to usual and customary exceptions to non-recourse provisions (e.g., fraud and misappropriation of funds) provided that such limited guaranties are evidenced by documentation approved by the Agent and (ii) indemnifications by the Borrower as to usual Hazardous Materials issues relating to the subject Individual Property provided that such indemnifications are evidenced by documentation customary for transactions of that type;

8.4.4 Debt (which is non-recourse to the Borrower) incurred by any Borrower Subsidiary (other than a Guarantor or a Property Owner of a Borrowing Base Asset);

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8.4.5 Indebtedness incurred in the ordinary course of business under capitalized lease and for the purchase of goods or services which are payable, without interest, within thirty (30) days of billing; and

8.4.6 Transactions, whether secured or unsecured, for which Agent’s prior written consent has been obtained.

Upon the incurrence of any such Debt by any Loan Party, the Agent shall review and, as necessary, adjust the Borrowing Base to reflect the incurrence of such Debt.

8.5 Respecting Individual Properties. Permit or otherwise suffer to occur any event such that the representations and warranties of the Borrower set forth in Section 6.17 would be untrue or misleading in any material respect.

8.6 Other Business. Enter into any line of business or make any material change in the nature of its business, purposes or operations, except as otherwise specifically permitted by this Agreement or the other Loan Documents.

8.7 Change of Control. Permit or otherwise suffer to occur any Change of Control.

8.8 Forgiveness of Debt. Cancel or otherwise forgive or release any Debt owed to it by any Person if such cancellation, forgiveness or release of such Debt would cause the Borrower to fail to comply with the Financial Covenants or have Loans outstanding in excess of the Borrowing Base unless otherwise approved by the Agent.

8.9 Affiliate Transactions. On and after the Closing Date, enter into, or be a party to, any transaction with any Person who is an Affiliate of the Borrower, or any Borrower Subsidiary, or any Loan Party, except for transactions with terms consistent with arms length contracts with independent third parties.

8.10 Amendments; Terminations of Related Documents. Enter into, acquiesce in, suffer or permit any amendment, restatement or other modification or termination of any of the Formation Documents, without the express prior written consent of the Agent.

8.11 ERISA. Except for Code Section 401(k) plans, establish or be obligated to contribute to any Plan.

8.12 Bankruptcy Filings. File a petition under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property.

8.13 Investment Company. Become an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

8.14 Holding Company. Become a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

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8.15 Use of Proceeds. Permit the proceeds of the Loan, or any other accommodation at any time made hereunder, to be used for any purpose which entails a violation of, or is inconsistent with, Regulation T, U or X of the Board of Governors of the Federal Reserve, or for any purpose other than those set forth in Section 1.3.

8.16 Distributions. Authorize, declare, or pay any Distributions on behalf of the Borrower, except for Permitted Distributions or (ii) take any action which would amend, modify, or terminate any Distribution due, or the terms of any Formation Document relating to Distributions due, to the Borrower, or any Borrower Subsidiary. The term “Permitted Distributions” shall mean, (x) distributions contemplated by Section 7.26.4 and (y) so long as no Default or Event of Default exists and is continuing, or would be created thereby, subject to requirements set forth in Section 9.2, hereof, any Distributions by the Borrower and the REIT in accordance with its Formation Documents.

8.17 Restrictions on Investments. Make or permit to exist or to remain outstanding any Investment except which is or results in (“Permitted Investments”):

8.17.1 marketable direct or guaranteed general obligations of the United States of America which mature within one year from the date of purchase;

8.17.2 bank deposits, certificates of deposit and banker’s acceptances, or other obligations in or of the Lenders or banks located within and chartered by the United States of America or a state and having assets of over $500,000,000.00; and

8.17.3 the Borrower’s Subsidiaries, subject in all instances to the terms of this Agreement;

8.17.4 the acquisition of any asset related to the operation, ownership or management of the Individual Properties or any of the other assets of the Borrower or the Borrower Subsidiaries;

8.17.5 the acquisition of any asset related to the operation, ownership or management of real estate properties consistent with the Borrower’s existing investments and otherwise permitted to be acquired by the REIT in accordance with its organizational documents.

8.18 Negative Pledges, Etc. Enter into any agreement subsequent to the Closing Date (other than a Loan Document) which (a) prohibits the creation or assumption of any Lien upon any of the Collateral, including, without limitation, any hereafter acquired property, (b) specifically prohibits the amendment or other modification of this Agreement or any other Loan Document, or (c) could reasonably be expected to have a Material Adverse Effect.

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ARTICLE 9
SPECIAL PROVISIONS

9.1 Legal Requirements. The Borrower, any Loan Party, or any Borrower Subsidiary may contest in good faith any claim, demand, levy or assessment under any Legal Requirements or taxes owed by any person or entity if: (i) the contest is based upon a material question of law or fact raised by such Person in good faith; (ii) such Person properly commences and thereafter diligently pursues the contest; (iii) the contest will not materially impair the ability to ultimately comply with the contested Legal Requirement should the contest not be successful; (iv) reasonable reserves in an amount necessary to undertake and pay for such contest and any corrective or remedial action then or thereafter reasonably likely to be necessary shall have been established in a manner satisfactory to the Agent or deposited in cash (or cash equivalents) with the Agent to be held during the pendency of such contest, or such contested amount shall have been duly bonded in accordance with applicable law; (v) if the contest relates to a Legal Requirement under Environmental Law, the conditions set forth in the Environmental Indemnity relating to such contests shall be satisfied; (vi) no risk of sale, forfeiture or loss of any interest in any Individual Property or the Collateral or any part thereof arises during the pendency of such contest; and (vii) such contest does not have and could not reasonably be expected to have a Material Adverse Effect.

9.2 Recourse Provisions.

9.2.1 Borrower Fully Liable. The Borrower shall be fully liable for the Loan and the Obligations to each of the Lenders.

9.2.2 Additional Matters. Nothing contained in this Section 9.2 or elsewhere shall: (i) limit the right of Agent or any of the Lenders to obtain injunctive relief or to pursue equitable remedies under any of the Loan Documents, excluding only any injunctive relief ordering payment of obligations by any Person or entity for which personal liability does not otherwise exist; or (ii) limit the liability of any attorney, law firm, accountant or other professional who or which renders or provides any written opinion or certificate to Agent or any of the Lenders in connection with the Loan even though such person or entity may be a member of the Borrower.

9.3 Payment of Obligations. Upon the payment in full of the Obligations, in immediately available funds, including, without limitation, all unreimbursed costs and expenses of the Agent and of each Lender for which the Borrower is responsible, the Agent shall release any security and other collateral interests, including, without limitation, the Payment Direction Letters, rights of setoff and right to freeze granted to the Agent as provided for herein and under the other Loan Documents and shall execute and deliver such documents and termination statements as the Borrower or any other Loan Party reasonably requests to evidence such termination and release. However, such release by the Agent shall not be deemed to terminate or release any Person from any obligation or liability under the Loan Documents which specifically by its terms survives the payment in full of the Obligations.

ARTICLE 10
EVENTS OF DEFAULT

The following provisions deal with Default, Events of Default, notice, grace and cure periods, and certain rights of Agent following an Event of Default.

10.1 Default and Events of Default. The term “Default” as used herein or in any of the other Loan Documents shall mean an Event of Default, or any fact or circumstance which constitutes, or upon the lapse of time, or giving of notice, or both, could constitute, an Event of Default. The occurrence of any of the following events, respectively, shall, subject to the giving of any notice or the expiration of any applicable grace period referred to in Section 10.2 without the cure thereof, constitute an “Event of Default” herein. Upon the occurrence of any Event of Default described in Sections 10.1.8, any and all Obligations shall become due and payable without any further act on the part of the Agent. Upon the occurrence of any other Event of Default, the Agent may declare any and all Obligations immediately due and payable. The occurrence and continuance of any Event of Default shall also constitute, without notice or demand, a default under all other agreements between the Agent and/or the Lenders and the Borrower and instruments and papers heretofore, now, or hereafter given the Agent and/or the Lenders by the Borrower.

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10.1.1 Failure to Pay the Loan. The failure by the Borrower to pay when due any principal of, interest on, or fees in respect of, the Loans.

10.1.2 Failure to Make Other Payments. The failure by the Borrower to pay when due (or upon demand, if payable on demand) any payment the Obligation other than any payment the Obligation on account of the principal of, or interest on, or fees in respect of, the Loans.

10.1.3 Note, Security Documents, and Other Loan Documents. Any other default in the performance of any term or provision of the Note, or of the Security Documents, or of any of the other Loan Documents, or a breach, or other failure to satisfy, any other term, provision, condition or warranty under the Note, the Security Documents, or any other Loan Document, regardless of whether any then undisbursed portion of the Loan is sufficient to cover any payment of money required thereby, and the specific grace period, if any, allowed for the default in question shall have expired without such default having been cured.

10.1.4 Default under Other Agreements. The occurrence of any breach of any covenant or Obligation imposed by, or of any default under, any agreement (including any Loan Document) between the Agent and/or the Lenders and the Borrower, the other Loan Parties, and/or the Property Owners or instrument given by the Borrower and such Persons to the Agent and/or the Lenders in connection with the Facility and the expiry, without cure, of any applicable grace period (notwithstanding that the Agent and/or the Lenders may not have exercised all or any of its/their rights on account of such breach or default).

10.1.5 Representations and Warranties. If any representation or warranty made by the Borrower or by any of the other Loan Parties or the Borrower Subsidiaries in the Loan Documents was untrue or misleading in a manner which could reasonably be expected to have a Material Adverse Effect.

10.1.6 Affirmative Covenants. The breach of any covenant contained in Article 7 herein, including, without limitation, the Financial Covenants.

10.1.7 Negative Covenants. The breach of any covenant contained in Article 8 herein.

10.1.8 Financial Status and Insolvency.

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(a) the Borrower shall: (i) admit in writing its inability to pay its debts generally as they become due; (ii) file a petition in bankruptcy or a petition to take advantage of any insolvency act; (iii) make an assignment for the benefit of creditors; (iv) consent to, or acquiesce in, the appointment of a receiver, liquidator or trustee of itself or of the whole or any substantial part of its properties or assets; (v) file a petition or answer seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Federal Bankruptcy laws or any other applicable law; (vi) have a court of competent jurisdiction enter an order, judgment or decree appointing a receiver, liquidator or trustee of the Borrower, or of the whole or any substantial part of the property or assets of the Borrower, and such order, judgment or decree shall remain unvacated or not set aside or unstayed for sixty (60) days; (vii) have a petition filed against it seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Federal Bankruptcy laws or any other applicable law and such petition shall remain undismissed for sixty (60) days; (viii) have, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction assume custody or control of the Borrower or of the whole or any substantial part of its property or assets and such custody or control shall remain unterminated or unstayed for sixty (60) days; or (ix) have an attachment or execution levied against any substantial portion of the property of the Borrower or against any substantial portion of the Collateral which is not discharged or dissolved by a bond within thirty (30) days; or

(b) any such event set forth in subsection (i) above shall occur with respect to any other Loan Party, unless such event does not result in a breach of the Financial Covenants or a required payment under Section 2.5.1(a).

10.1.9 Loan Documents. If any Loan Document for any reason other than the satisfaction in full of all Obligations shall cease to be in full force and effect (other than in accordance with its terms), thereby preventing the Agent and/or the Lenders from obtaining the practical realization of the benefits thereof, or if any Loan Document shall be declared null and void or any Loan Party shall claim or declare any such Loan Document to no longer be in full force and effect or is null and void, or if the Liens and security interests purported to be created by any of the Loan Documents shall cease to be valid, perfected, first priority (except as otherwise expressly provided herein) security interests;

10.1.10 Judgments. One or more judgments or decrees shall be entered against the Borrower or any other Loan Party or Borrower Subsidiary involving a liability (not paid or fully covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of sixty (60) consecutive days, and the aggregate amount of all such judgments exceeds $500,000.00;

10.1.11 Default of Other Specified Debt and Related Documents. If a Default or Event of Default (regardless of how or if defined) shall occur under any Debt of (a) the Borrower, or (b) any Borrower Subsidiaries in excess of $10,000,000.00 in any instance or $25,000,000.00 in the aggregate;

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10.1.12 ERISA. (i) If any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code, any Plan shall have had or is likely to have a trustee appointed to administer such Plan, any Plan is, shall have been or is likely to be terminated or to be the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a contribution required to be made to a Plan has not been timely made, the Borrower or any Borrower Subsidiary or any ERISA Affiliate has incurred or is likely to incur a liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code, or the Borrower or any Borrower Subsidiary has incurred or is likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(l) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or employee pension benefit plans (as defined in Section 3(2) of ERISA) and any of the foregoing could have a Material Adverse Effect; (ii) if there shall result from any such event or events the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability which could have, or reasonably be expected to have, a Material Adverse Effect; or (iii) if which lien, security interest or liability, individually, and/or in the aggregate, in the opinion of the Agent could have, or reasonably be expected to have, a Material Adverse Effect.

10.1.13 Change of Control. If a Change of Control shall occur.

10.1.14 Indictment; Forfeiture. The indictment of, or institution of any legal process or proceeding against, the Borrower, any other Loan Party, and/or any Borrower Subsidiary under any applicable law where the relief, penalties, or remedies sought or available include the forfeiture of any property of the Borrower and/or any other such Person and/or the imposition of any stay or other order, the effect of which could reasonably be expected to have a Material Adverse Effect.

10.1.15 Default of Other Obligations. Any failure by the Borrower to pay at maturity, or within any applicable grace period, any obligation for borrowed money, or in respect of any capitalized lease, or any failure to observe or perform any material term, covenant or agreement contained in any agreement by which the Borrower is bound, evidencing or securing borrowed money, or in respect of any capitalized lease, such that the holder or holders thereof or of any obligations issued thereunder have accelerated the maturity thereof.

10.1.16 Termination of Guaranty or the Borrower Consent. The termination or attempted termination of (i) any Guaranty by any Guarantor of the Obligations, or (ii) any Indemnification by any Indemnitor.

10.1.17 Generally. A default by the Borrower in the performance of any term, provision or condition of this Agreement to be performed by the Borrower, or a breach, or other failure to satisfy, any other term provision, condition, covenant or warranty under this Agreement and such default remains uncured beyond any applicable specific grace period provided for in this Agreement, or as set forth in Section 10.2. below.

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10.2 Grace Periods and Notice. As to each of the foregoing events the following provisions relating to grace periods and notice shall apply:

10.2.1 No Notice or Grace Period. Except for any grace or notice period specifically provided for in any referenced section of this Agreement, there shall be no grace period and no notice provision with respect to the payment of principal at maturity and no grace period and no notice provision with respect to defaults related to the voluntary filing of bankruptcy or reorganization proceedings or an assignment for the benefit of creditors, or with respect to a breach of warranty or representation as set forth in Section 10.1.5, or with respect to the breach of any of the affirmative covenants set forth in Sections 7.26.1, 7.26.3, and 7.26.3.

10.2.2 Nonpayment of Interest and Principal. As to the nonpayment of interest, installments of principal, and in connection with a Mandatory Principal Prepayment prior to maturity there shall be a ten (10) Business Day grace period without any requirement of notice from Agent.

10.2.3 Other Monetary Defaults. All other monetary defaults shall have a five (5) Business Day grace period following notice from Agent.

10.2.4 Nonmonetary Defaults.

(a) As to non-monetary default under Section 7.2, 7.5, 7.17, 7.20, or 7.21, or with respect to the breach of any of the negative covenants set forth in Article 8, there shall be a ten (10) day grace period following notice from Agent of such default;

(b) As to non-monetary default under Section 7.16, there shall be a five (5) day grace period following notice from Agent of such default;

(c) As to any other non-monetary default, unless there is a specific shorter or longer grace period provided for in this Loan Agreement or in another Loan Document, there shall be a thirty (30) day grace period following notice from Agent or, if such default would reasonably require more than thirty (30) days to cure or remedy, such longer period of time not to exceed a total of ninety (90) days from Agent’s notice as may be reasonably required so long as Borrower shall commence reasonable actions to remedy or cure the default within thirty (30) days following such notice and shall diligently prosecute such curative action to completion within such ninety (90) day period. However, where there is an emergency situation in which there is danger to person or property such curative action shall be commenced as promptly as possible. As to breaches of warranties and representations (other than those related to financial information) there shall be a thirty (30) day grace period following notice from Agent.

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ARTICLE 11
REMEDIES

11.1 Remedies. Upon the occurrence and during the continuance of an Event of Default, whether or not the indebtedness evidenced by the Notes and secured by the Security Documents shall be due and payable or Agent shall have instituted any foreclosure or other action for the enforcement of the Security Documents or the Notes, Agent may, and shall upon the direction of the Required Lenders, in addition to any other remedies which Agent may have hereunder or under the other Loan Documents, or otherwise, and not in limitation thereof, and in Agent’s sole and absolute discretion:

11.1.1 Accelerate Debt. Agent may, and with the direction of the Required Lenders shall, declare the indebtedness evidenced by the Notes and secured by the Security Documents immediately due and payable (provided that in the case of a voluntary petition in bankruptcy filed by the Borrower or an involuntary petition in bankruptcy filed against the Borrower (after expiration of the grace period, if any, set forth in Section 10.1.8), such acceleration shall be automatic).

11.1.2 Terminate Commitments. If any Event of Default shall occur and be continuing, the Agent may, by notice to Borrower, terminate the obligation of the Lenders to fund Loans in respect of the then unfunded portion of the Facility, and, upon such notice being given, such obligation of the Lenders to make any further Loans in respect of the then unfunded portion of the Facility shall terminate immediately and the Lenders shall be relieved of all further obligations to make any Loans to Borrower.

11.1.3 Pursue Remedies. Agent may, and with the direction of the Required Lenders shall, pursue any and all remedies provided for hereunder, under any one or more of the other Loan Documents, and/or otherwise.

11.2 Written Waivers. If a Default or an Event of Default is waived by the Required Lenders, in their sole discretion, pursuant to a specific written instrument executed by an authorized officer of Agent, the Default or Event of Default so waived shall be deemed to have never occurred.

11.3 Power of Attorney. For the purpose of exercising the rights granted by this Article 11, as well as any and all other rights and remedies of Agent under the Loan Documents, the Borrower hereby irrevocably constitutes and appoints Agent (or any agent designated by Agent) its true and lawful attorney-in-fact, with full power of substitution, upon the occurrence and during the continuance of any Event of Default, to execute, acknowledge and deliver any instruments and to do and perform any acts in the name and on behalf of the Borrower. In connection with the foregoing power of attorney, the Borrower hereby grants unto the Agent (acting through any of its officers) full power to do any and all things after the occurrence and during the continuance of an Event of Default necessary or appropriate in connection with the exercise of such powers as fully and effectually as the Borrower might or could do, hereby ratifying all that said attorney shall do or cause to be done by virtue of this Agreement. The foregoing power of attorney shall not be affected by any disability or incapacity suffered by the Borrower and shall survive the same. All powers conferred upon the Agent by this Agreement, being coupled with an interest, shall be irrevocable until this Agreement is terminated by a written instrument executed by a duly authorized officer of the Agent.

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ARTICLE 12
SECURITY INTEREST AND SET-OFF.

12.1 Security Interest. The Borrower hereby grants to the Agent and each of the Lenders, a continuing lien, security interest and right of setoff as security for all of the Obligations to Agent and each of the Lenders, whether now existing or hereafter arising, upon and against all Depository Accounts, Accounts, deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Agent or any of the Lenders or any entity under the control of KeyBank National Association and its successors and assigns, or in transit to any of them.

12.2 Set-Off. After the occurrence and during the continuance of any Event of Default, any such Depository Accounts, Accounts, deposits, balances or other sums credited by or due from Agent, any affiliate of Agent or any of the Lenders, or from any such affiliate of any of the Lenders, to the Borrower may to the fullest extent not prohibited by applicable law at any time or from time to time, without regard to the existence, sufficiency or adequacy of any other collateral, and without notice or compliance with any other condition precedent now or hereafter imposed by statute, rule of law or otherwise, all of which are hereby waived, be set off, appropriated and applied by Agent against any or all of the Borrower’s Obligations irrespective of whether demand shall have been made, in such manner as Agent in its sole and absolute discretion may determine. Within three (3) Business Days of making any such set off, appropriation or application, Agent agrees to notify the Borrower thereof, provided the failure to give such notice shall not affect the validity of such set off or appropriation or application. ANY AND ALL RIGHTS TO REQUIRE AGENT OR ANY OF THE LENDERS TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES A LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF SUCH BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.3 Application. Each of the Lenders agrees with each other Lender that with respect to this Agreement or under any other Loan Document (a) if an amount to be set off is to be applied to indebtedness of the Borrower or any other Loan Party to such Lender, other than the respective Obligations due to such Lender, such amount shall be applied ratably to such other indebtedness and to the Borrower’s Obligations due to such Lender, and (b) if such Lender shall receive from the Borrower or any other Loan Party, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim due to such Lender by proceedings against the Borrower or any other Loan Party at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar proceedings, or otherwise, and shall retain and apply to the payment of the Obligations due to such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Borrower’s Obligations due to all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the subject Obligations its proportionate payment as contemplated by this Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest.

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12.4 Right to Freeze. The Agent and each of the Lenders shall also have the right, at its option, upon the occurrence and during the continuance of any event which would entitle the Agent and each of the Lenders to set off or debit as set forth in Section 12.2, to freeze, block or segregate any such deposits, balances and other sums so that the Borrower may not access, control or draw upon the same.

12.5 Additional Rights. The rights of Agent, the Lenders and each affiliate of Agent and each of the Lenders under this Article 12 are in addition to, and not in limitation of, other rights and remedies, including other rights of set off, which Agent or any of the Lenders may have.

ARTICLE 13
THE AGENT AND THE LENDERS

13.1 Appointment. KeyBank National Association is hereby appointed as Agent hereunder and under each other Loan Document, and each Lender hereby irrevocably authorizes the Agent to act as agent for Lender and to take such actions as Lender is obligated or entitled to take under the provisions of this Agreement and the other Loan Documents. Agent agrees to act as such upon the express conditions contained in this Article in substantially the same manner that it would act in dealing with a loan held for its own account. Agent shall not have a fiduciary relationship with respect to any Lender by reason of this Agreement. The provisions of this Article 13 which do not expressly grant Borrower certain rights by direct reference to Borrower are solely for the benefit of the Agent and the Lenders, and Borrower shall not have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of Lender and does not assume, and shall not be deemed to have assumed, any obligations toward or relationship of agency or trust with or for the Borrower, provided, however, that nothing contained in this Article 13 shall be deemed to release Agent or the Lenders from any of their obligations under this Agreement.

13.2 Reliance on Agent. All acts of and communications by the Agent, as agent for the Lenders, shall be deemed legally conclusive and binding; and Borrower or any third party (including any court) shall rely on any and all communications or acts of the Agent with respect to the exercise of any rights or the granting of any consent, waiver or approval on behalf of a Lender in all circumstances where an action by such Lender is required or permitted pursuant to this Agreement or the provisions of any other Loan Document or by applicable law without the right or necessity of making any inquiry of any individual Lender as to the authority of Agent with respect to such matter. In no event shall any of the foregoing limit the rights or obligations of any Lender with respect to any other Lender pursuant to this Article 13.

13.3 Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto or are otherwise necessary or desirable in connection with the administration of the Loan, and may exercise all other powers of Lender as are not made subject to the consent of the Required Lenders pursuant to Section 13.26.1 or to the consent of all Lenders pursuant to Section 13.26.2. Without limiting the foregoing, the Agent may consent to or execute easements, plats, dedications, release of minor portions of the collateral and similar documents. The Agent shall not be considered, or be deemed, a separate agent of the Lenders hereunder, but is, and shall be deemed, acting in its contractual capacity as Agent, exercising such rights and powers under the Loan Documents as are specifically delegated to the Agent or Agent is otherwise entitled to take hereunder. Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action except any action specifically provided by the Loan Documents to be taken by the Agent.

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13.4 Disbursements.

13.4.1 At least two (2) Business Days (by 11:00 a.m. Eastern Time) prior to each date a disbursement of a Loan is to be made hereunder pursuant to this Agreement (or at least two (2) LIBOR Business Days by 11:00 a.m. Eastern Time for any disbursements to be made at the Adjusted LIBOR Rate), the Agent shall notify each Lender of the proposed disbursement. Each Lender shall make available to Agent (or the funding Lender or entity designated by the Agent), the amount of such Lender’s Percentage of such disbursement (with respect to such Lender, such amount being referred to herein as an “Advance”) in immediately available funds not later than 11:00 a.m. Eastern Time on the date such disbursement is to be made (such date being referred to herein as a “Funding Date”). Unless the Agent shall have been notified by any Lender prior to such time for funding in respect of any Advance that such Lender does not intend to make available to the Agent such Lender’s Advance, the Agent may assume that such Lender has made such amount available to the Agent and the Agent, in its sole discretion, may, but shall not be obligated to, make available to Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Agent by such Lender on or prior to the respective Funding Date, such Lender agrees to pay and Borrower agrees to repay to Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to Borrower until the date such amount is paid or repaid to Agent, at (A) in the case of such Lender, the Federal Funds Effective Rate, and (B) in the case of Borrower, the interest rate applicable at the time to a disbursement made on such Funding Date. If such Lender shall pay to Agent such corresponding amount, such amount so paid shall constitute such Lender’s Advance, and if both such Lender and Borrower shall have paid and repaid, respectively, such corresponding amount, Agent shall promptly return to Borrower such corresponding amount in same day funds. If any Lender declines to make available to Agent such Lender’s advance as described above, so long as no Event of Default has occurred and is continuing, upon written demand of Borrower, the Borrower may require such Lender to sell and assign its entire interest in the Loans pursuant to Section 13.22 hereof to an Eligible Assignee, reasonably approved by Agent, upon payment by such Eligible Assignee of the entire par amount of such Lender’s interest.

13.4.2 Requests by the Agent for funding by the Lenders of disbursements of the Loan will be made by facsimile. Each Lender shall make its Advance available to the Agent in dollars and in immediately available funds to such Lender and account as the Agent may designate, not later than Noon Eastern Time on the Funding Date. Nothing in this Section 13.4 shall be deemed to relieve any Lender of its obligation hereunder to make any Advance on any Funding Date, nor shall any Lender be responsible for the failure of any other Lender to perform its obligations to make any Advance hereunder, and the Commitment of any Lender shall not be increased or decreased as a result of the failure by any other Lender to perform its obligation to make any Advances hereunder.

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13.4.3 As soon as practical Agent will promptly forward to each Lender copies of any draw request documents and, if applicable, cause the Lender’s Consultant to forward to each Lender a copy of the Lender’s Consultant’s most recent inspection. Delivery of the draw request documents and the Lender’s Consultant’s inspection report shall not be a condition to funding any Advance.

13.5 Distribution and Apportionment of Payments.

13.5.1 Subject to Section 13.5.3, payments actually received by Agent for the account of the Lenders shall be paid to them promptly after receipt thereof by Agent, but in any event within one (1) Business Day, provided that, if any such payments are not distributed to the Lenders within one (1) Business Day after Agent’s receipt thereof, Agent shall pay to such Lenders interest thereon, at the lesser of (i) the Federal Funds Effective Rate and (ii) if the applicable payment represents repayment of a portion of the principal of the Loan, the rate of interest applicable to such portion of the Loan, from the date of receipt of such funds by Agent until such funds are paid in immediately available funds to such Lenders provided such funds are received by Agent not later than 11:00 A.M. Eastern Time on the date of receipt. All payments of principal and interest in respect of the Loan, all payments of the fees described in this Agreement (but not in any separate fee letter except to the extent expressly set forth therein), and all payments in respect of any other obligations of Borrower under the Loan Documents shall be allocated among such of Lenders as are entitled thereto, in proportion of their respective Percentages or otherwise as provided herein or in the other Loan Documents, as the case may be. The Agent shall distribute to each Lender at its primary address set forth herein or in its Assignment and Assumption, or at such other address as a Lender may request in writing, such funds as it may be entitled to receive, provided that the Agent shall in any event not be bound to inquire into or determine the validity, scope or priority of any interest or entitlement of any Lender and may suspend all payments and seek appropriate relief (including without limitation instructions from the Required Lenders, or all Lenders, as applicable, or an action in the nature of interpleader) in the event of any doubt or dispute as to any apportionment or distribution contemplated hereby. The order of priority herein is set forth solely to determine the rights and priorities of the Lenders as among themselves and may at any time or from time to time be changed by the Lenders as they may elect, in writing, without necessity of notice to or consent of or approval by Borrower. The Agent shall upon each distribution noted above promptly notify Borrower of such distribution and each Lender of the amounts so distributed to it applicable to principal of, and interest on, the proportionate share held by the applicable Lender. Each payment to the Agent by Borrower as noted in this Section shall constitute a payment by the Borrower to each Lender in the amount of such Lender’s proportionate of such payment, and any such payment to the Agent shall not be considered outstanding for any purpose after the date of such payment by the Borrower to the Agent without regard to whether or when the Agent makes distribution thereof as provided above.

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13.5.2 Distribution of Liquidation Proceeds. Subject to the terms and conditions hereof, the Agent shall distribute all Liquidation Proceeds in the order and manner set forth below:

First:	To the Agent, towards any fees and any expenses for which the Agent is entitled to reimbursement under this Agreement or the other Loan Documents not theretofore paid to the Agent.
Second:	To all applicable Lenders in accordance with their proportional share based upon their respective Percentages until all Lenders have been reimbursed for all expenses which such Lenders have previously paid to the Agent and not theretofore paid to such Lenders.
Third:	Pro Rata to (a) all Lenders in accordance with their proportional share based upon their respective Percentages until all Lenders have been paid in full all principal and interest due to such Lenders under the Loan, with each Lender applying such proceeds for purposes of this Agreement against the outstanding principal balance and accrued and unpaid interest due to such Lender under the Loans in such fashion and priority as the Agent may direct, and (b) to the Agent in connection with any Interest Rate Protection Agreement (if any) or other hedging or protection arrangement entered into by the Borrower or any other party with the KeyBank National Association with respect to the Loan.
Fourth:	To all applicable Lenders in accordance with their proportional share based upon their respective Percentages until all Lenders have been paid in full all other amounts due to such Lenders under the Loans including, without limitation, any costs and expenses incurred directly by such Lenders to the extent such costs and expenses are reimbursable to such Lenders by the Borrower under the Loan Documents.
Fifth:	To the Borrower or such third parties as may be entitled to claim Liquidation Proceeds.

13.5.3 If a Lender (a “Defaulting Lender”) defaults in making any Advance or paying any other sum payable by it hereunder, such sum together with interest thereon at the Default Rate from the date such amount was due until repaid (such sum and interest thereon as aforesaid referred to, collectively, as the “Lender Default Obligation”) shall be payable by the Defaulting Lender (i) to any Lender(s) which elect, at their sole option (and with no obligation to do so), to fund the amount which the Defaulting Lender failed to fund or (ii) to Agent or any other Lender which under the terms of this Agreement is entitled to reimbursement from the Defaulting Lender for the amounts advanced or expended. Notwithstanding any provision hereof to the contrary, until such time as a Defaulting Lender has repaid the Lender Default Obligation in full, all amounts which would otherwise be distributed to the Defaulting Lender shall instead be applied first to repay the Lender Default Obligation (to be applied first to interest at the Default Rate and then to principal) until the Lender Default Obligation has been repaid in full (whether by such application or by cure by the Defaulting Lender), whereupon such Lender shall no longer be a Defaulting Lender. Any interest collected from Borrower on account of principal advanced by any Lender(s) on behalf of a Defaulting Lender shall be paid to the Lender(s) who made such advance and shall be credited against the Defaulting Lender’s obligation to pay interest on the amount advanced at the Default Rate. If no other Lender makes an advance a Defaulting Lender failed to fund, a portion of the indebtedness of Borrower to the Defaulting Lender equal to the Lender Default Obligation shall be subordinated to the indebtedness of Borrower to all other Lenders and shall be paid only after the indebtedness of Borrower to all other Lenders is paid. The provisions of this Section shall apply and be effective regardless of whether an Event of Default

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occurs and is then continuing, and notwithstanding (i) any other provision of this Agreement to the contrary or (ii) any instruction of Borrower as to its desired application of payments. Except as specifically provided in Section 13.26.2, no Defaulting Lender shall have the right to vote on matters which are subject to the consent or approval of Required Lenders or all Lenders and while any Lender is a Defaulting Lender the requisite percentage of Lenders which constitutes the Required Lenders shall be calculated exclusive of the Percentage of the Defaulting Lender. The Agent shall be entitled to (i) withhold or set off, and to apply to the payment of the Lender Default Obligation any amounts to be paid to such Defaulting Lender under this Agreement, and (ii) bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the Lender Default Obligation and, to the extent such recovery would not fully compensate the Lenders for the Defaulting Lender’s breach of this Agreement, to collect damages. In addition, the Defaulting Lender shall indemnify, defend and hold Agent and each of the other Lenders harmless from and against any and all claims, actions, liabilities, damages, costs and expenses (including attorneys’ fees and expenses), plus interest thereon at the Default Rate, for funds advanced by Agent or any other Lender on account of the Defaulting Lender or any other damages such persons may sustain or incur by reason of or as a direct consequence of the Defaulting Lender’s failure or refusal to abide by its obligations under this Agreement. Any Lender who is not a Defaulting Lender may, but shall not be obligated, in its sole discretion, to acquire all or a portion of a Defaulting Lender’s Commitment. Any Lender desiring to exercise such right shall give written notice thereof to the Agent and the Borrower no sooner than 2 Business Days and not later than 5 Business Days after such Defaulting Lender became a Defaulting Lender. If more than one Lender exercises such right, each such Lender shall have the right to acquire an amount of such Defaulting Lender’s Commitment in proportion to the Commitments of the other Lenders exercising such right. If after such 5th Business Day, the Lenders have not elected to purchase all of the Commitment of such Defaulting Lender, then the Borrower may, by giving written notice thereof to the Agent, such Defaulting Lender and the other Lenders, either (i) demand that such Defaulting Lender assign its Commitment to an Eligible Assignee subject to and in accordance with the provisions of Section 13.22 for the purchase price provided for below or (ii) terminate the Commitment of such Defaulting Lender, whereupon such Defaulting Lender shall no longer be a party hereto or have any rights or obligations hereunder or under any of the other Loan Documents. No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. Upon any such purchase or assignment, the Defaulting Lender’s interest in the Loans and its rights hereunder (but not its liability in respect thereof or under the Loan Documents or this Agreement to the extent the same relate to the period prior to the effective date of the purchase except to the extent assigned pursuant to such purchase) shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest to the purchaser or assignee thereof, including an appropriate Assignment and Acceptance Agreement and, notwithstanding Section 13.22, shall pay to the Agent an assignment fee in the amount of $4,000.00. The purchase price for the Commitment of a Defaulting Lender shall be equal to the amount of the principal balance of the Loans outstanding and owed by the Borrower to the Defaulting Lender. Prior to payment of such purchase price to a Defaulting Lender, the Agent shall apply against such purchase price any amounts retained by the Agent as set forth above. Notwithstanding the foregoing, the Defaulting Lender shall be entitled to receive amounts owed to it by the Borrower under the Loan Documents which accrued prior to the date of the default by the Defaulting Lender, to the extent the same are received by the Agent from or on behalf of the Borrower. There shall be no recourse against any Lender or the Agent for the payment of such sums except to the extent of the receipt of payments from any other party or in respect of the Loans.

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13.5.4 At least five Business Days prior to the first date on which interest or fees are payable hereunder for the account of any Lender, each Lender that is not incorporated under the laws of the United States of America, or a state thereof, agrees that it will deliver to each of the Agent and the Borrower two duly completed copies of United States Internal Revenue Service Form W-8 BEN or W-8 ECI, certifying in either case that such Lender is entitled to receive payments under this Agreement and the Note without deduction or withholding of any United States federal income taxes. Each Lender which so delivers a Form W-8 BEN or W-8 ECI further undertakes to deliver to the Agent two additional copies of such form (or a successor form) on or before the date that such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent forms so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Agent, in each case certifying that such Lender is entitled to receive payments under this Agreement and the Note without deduction or withholding of any United States federal income taxes, unless any change in treaty, law or regulation has occurred after the initial delivery required by this Section 13.5.4 but prior to the date on which any such subsequent delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender advises the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax, provided, however, that if any such Lender so advises the Agent, Agent shall promptly notify Borrower thereof, and so long as no Event of Default has occurred and is continuing, upon written demand of Borrower, the Borrower may require such Lender to sell and assign its entire interest in the Loans pursuant to Section 13.22 hereof to an Eligible Assignee, reasonably approved by Agent, upon payment by such Eligible Assignee of the entire par amount of such Lender’s interest.

13.6 Agency Provisions Relating to Collateral.

13.6.1 The Agent is hereby authorized on behalf of all Lenders, without the necessity of any notice to or further consent from any Lender, at any time and from time to time, to take any action with respect to any collateral for the Loans or any Loan Document which may be necessary to preserve and maintain such collateral or to perfect and maintain perfected the liens upon such collateral granted pursuant to this Agreement and the other Loan Documents.

13.6.2 Except as provided in this Agreement, the Agent shall have no obligation whatsoever to any Lender or to any other person or entity to assure that any collateral exists or is owned by Borrower or is cared for, protected or insured or has been encumbered or that the liens granted herein or in any of the other Loan Documents or pursuant hereto or thereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority.

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13.6.3 Should the Agent commence any proceeding or in any way seek to enforce the Agent’s or the Lenders’ rights or remedies under the Loan Documents, irrespective of whether as a result thereof the Agent shall acquire title to any collateral, each Lender, upon demand therefor from time to time, shall contribute its share (based on its Percentage) of the reasonable costs and/or expenses of any such enforcement or acquisition, including, but not limited to, fees of receivers or trustees, court costs, title company charges, filing and recording fees, appraisers’ fees and fees and expenses of attorneys to the extent not otherwise reimbursed by Borrower. Without limiting the generality of the foregoing, each Lender shall contribute its share (based on its Percentage) of all reasonable costs and expenses incurred by the Agent (including reasonable attorneys’ fees and expenses) if the Agent employs counsel for advice or other representation (whether or not any suit has been or shall be filed) with respect to any collateral for the Loans or any part thereof, or any of the Loan Documents, or the attempt to enforce any security interest or lien on any collateral, or to enforce any rights of the Agent or the Lenders or any of Borrower’s or any other party’s obligations under any of the Loan Documents, but not with respect to any dispute between Agent and any other Lender(s). It is understood and agreed that in the event the Agent determines it is necessary to engage counsel for Lender from and after the occurrence of a Default or Event of Default, said counsel shall be selected by the Agent and written notice of such selection, together with a copy of such counsel’s engagement letter and fee estimate, shall be delivered to the Lenders.

13.6.4 In the event that all or any portion of the collateral for the Loans is acquired by the Agent as the result of the exercise of any remedies hereunder or under any other Loan Document, or is retained in satisfaction of all or any part of Borrower’s obligations under the Loan Documents, title to any such collateral or any portion thereof shall be held in the name of the Agent or a nominee or subsidiary of Agent, as agent, for the ratable benefit of the Agent and the Lenders. The Agent shall prepare a recommended course of action for such collateral (the “Post-Default Plan”), which shall be subject to the approval of the Required Lenders. The Agent shall administer the collateral in accordance with the Post-Default Plan, and upon demand therefor from time to time, each Lender will contribute its share (based on its Percentage) of all reasonable costs and expenses incurred by the Agent pursuant to the Post-Default Plan, including without limitation, any operating losses and all necessary operating reserves. To the extent there is net operating income from such collateral, the Agent shall, in accordance with the Post-Default Plan, determine the amount and timing of distributions to Lenders. All such distributions shall be made to Lenders in accordance with their respective Percentages. In no event shall the provisions of this subsection or the Post-Default Plan require the Agent or any Lender to take an action which would cause such Lender to be in violation of any applicable regulatory requirements.

13.7 Lender Actions Against Borrower or the Collateral. Each Lender agrees that it will not take any action, nor institute any actions or proceedings, against Borrower or any other person hereunder or under any other Loan Documents with respect to exercising claims against the Borrower or rights in any collateral without the consent of the Required Lenders. With respect to any action by the Agent to enforce the rights and remedies of the Agent and Lenders with respect to the Borrower and any collateral in accordance with the terms of this Agreement, each Lender hereby consents to the jurisdiction of the court in which such action is maintained.

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13.8 Assignment and Participation. No Lender shall be permitted to assign or sell all or any portion of its rights and obligations under this Agreement to Borrower or any Affiliate of Borrower.

13.9 Ratable Sharing. Subject to Sections 13.4 and 13.5, Lenders agree among themselves that (i) with respect to all amounts received by them which are applicable to the payment of the Loan, equitable adjustment will be made so that, in effect, all such amounts will be shared among them ratably in accordance with their Percentages, whether received by voluntary payment, by the exercise of the right of set-off or bankers’ lien, by counterclaim or cross action or by the enforcement of any or all of the Loan Documents or any collateral and (ii) if any of them shall by voluntary payment or by the exercise of any right of counterclaim, set-off, bankers’ lien or otherwise, receive payment of a proportion of the aggregate amount of the Loans held by it which is greater than its Percentage of the payments on account of the Loan, the one receiving such excess payment shall purchase, without recourse or warranty, an undivided interest and participation (which it shall be deemed to have done simultaneously upon the receipt of such payment) in such obligations owed to the others so that all such recoveries with respect to such obligations shall be applied ratably in accordance with their Percentages; provided, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to that party to the extent necessary to adjust for such recovery, but without interest except to the extent the purchasing party is required to pay interest in connection with such recovery. Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation.

13.10 General Immunity. Neither Agent nor any of its directors, officers, agents or employees shall be liable to Borrower or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith, except for its or their own gross negligence or willful misconduct. In the absence of gross negligence, the Agent shall not be liable for any apportionment or distribution of payments made by it in good faith pursuant to Section 13.5, and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Lender to whom payment was due, but not made, shall be to recover from the recipients of such payments any payment in excess of the amount to which they are determined to have been entitled.

13.11 No Responsibility for Loan, Recitals, Etc. Neither Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any use of the Loans; (ii) the performance or observance of any of the covenants or agreements of any party to any Loan Document; (iii) the satisfaction of any condition specified in this Agreement, except receipt of items purporting to be the items required to be delivered to any Agent; or (iv) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith, provided that the foregoing shall not release Agent from liability for its gross negligence or willful misconduct.

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13.12 Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by all the Lenders (or the Required Lenders, if such action may be directed hereunder by the Required Lenders), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of Lenders. Each Lender, severally to the extent of its Percentage, hereby agrees to indemnify Agent against and hold it harmless from any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action, provided that the foregoing shall not release Agent from liability for its gross negligence or willful misconduct.

13.13 Employment of Agents and Counsel. The Agent may undertake any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be liable to Lenders, except as to money or securities received by them or their authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder and under any other Loan Document.

13.14 Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be an employee of Agent, provided that the foregoing shall not release the Agent from liability for its gross negligence or willful misconduct. Any such counsel shall be deemed to be acting on behalf of Lender in assisting the Agent with respect to the Loan, but shall not be precluded from also representing Agent in any matter in which the interests of Agent and the other Lenders may differ.

13.15 Agent’ Reimbursement and Indemnification. Lenders agree to reimburse and indemnify Agent ratably (i) for any amounts (excluding principal and interest on the Loans and loan fees) not reimbursed by Borrower for which Agent is entitled to reimbursement under the Loan Documents, (ii) for any other expenses incurred by Agent on behalf of Lender, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents, if not paid by Borrower, (iii) for any expenses incurred by Agent on behalf of Lender which may be necessary or desirable to preserve and maintain collateral or to perfect and maintain perfected the liens upon the collateral granted pursuant to this Agreement and the other Loan Documents, if not paid by Borrower, (iv) for any amounts and other expenses incurred by Agent on behalf of Lender in connection with any default by any Lender hereunder or under the other Loan Documents, if not paid by such Lender, and (v) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of Agent.

13.16 Rights as a Lender. With respect to its Commitment, if any, Agent shall have the same rights, powers and obligations hereunder and under any other Loan Document as any Lender and may exercise such rights and powers as though it were not an Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include Agent in its individual capacities. The Borrower and each Lender acknowledge and agree that Agent and/or its affiliates may accept deposits from, lend money to, hold other investments in, and generally engage in any kind of trust, debt, equity or other transaction or have other relationships, in addition to those contemplated by this Agreement or any other Loan Document, with Borrower or any of its affiliates in which Borrower or such affiliate is not restricted hereby from engaging with any other person.

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13.17 Lenders’ Credit Decisions. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements and other information prepared by Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents.

13.18 Notice of Events of Default. Should Agent receive any written notice of the occurrence of a default or Event of Default, or should the Agent send Borrower a notice of Default or Event of Default, the Agent shall promptly furnish a copy thereof to each Lender.

13.19 Successor Agent.

13.19.1 Notwithstanding anything contained in this Agreement to the contrary, KeyBank National Association shall serve as Agent pursuant to this Agreement until the earlier to occur of the following (the “Resignation Event”): (a) the occurrence of an Event of Default, or (b) the date upon which the Facility is terminated. Following such a Resignation Event, Agent may resign from the performance of all its functions and duties hereunder at any time by giving at least thirty (30) days prior written notice to Lenders and Borrower. Such resignation shall take effect on the date set forth in such notice or as otherwise provided below. Such resignation by Agent as agent shall not affect its obligations hereunder, if any, as a Lender.

13.19.2 Upon resignation by the Agent, or any successor Agent, the Required Lenders shall appoint a successor Agent with the consent of Borrower, which shall not be unreasonably withheld, conditioned or delayed (provided that no consent of Borrower shall be required if the successor Agent is also a Lender or if an Event of Default then exists). If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment within thirty (30) days after the retiring Agent’s giving notice of resignation, then the retiring Agent may appoint a successor Agent with the consent of Borrower, which shall not be unreasonably withheld, conditioned or delayed (provided that no consent of Borrower shall be required if the successor Agent is also a Lender or if an Event of Default then exists). Upon the acceptance of any appointment as an Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the Agent and the Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents other than its liability, if any, for duties and obligations accrued prior to its retirement. After any retiring Agent’s resignation hereunder as an Agent, the provisions of this Article 13 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as an Agent hereunder and under the other Loan Documents.

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13.20 Distribution by Agent. If in the opinion of the Agent distribution of any amount received by it in such capacity hereunder or under the Notes or under any of the other Loan Documents might involve any liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction or has been resolved by the mutual consent of all Lenders. In addition, the Agent may request full and complete indemnity, in form and substance satisfactory to it, prior to making any such distribution. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each person to whom any such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over to the same in such manner and to such persons as shall be determined by such court.

13.21 Holders. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Agent. Any request, authority or consent of any person or entity who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.

13.22 Assignment and Participation. Each Lender shall have the right to assign, transfer, sell, negotiate, pledge or otherwise hypothecate this Agreement and any of its rights and security hereunder and under the other Loan Documents to any other Eligible Assignee with the prior written consent of the Agent and with the prior written consent of Borrower, which consents by the Agent and the Borrower shall not be unreasonably withheld, conditioned or delayed (provided that, in the case of the Borrower, such consent shall not be required if a Default or Event of Default shall have occurred and be continuing and provided, further, such consent shall not be required from either the Agent or the Borrower in connection with any assignment as to which (a) the assignee is an existing Lender (other than a Defaulting Lender) or (b) an Affiliate or a Related Fund of the assigning Lender)); provided, however, that (i) the parties to each such assignment shall execute and deliver to Agent, for its approval and acceptance, an Assignment and Assumption in form and substance satisfactory to the Agent and substantially in the form set forth in Exhibit B attached hereto, (ii) each such assignment shall be of a constant, and not a varying, percentage of the assigning Lender’s rights and obligations under this Agreement, (iii) unless the Agent and, so long as no Event of Default exists, Borrower otherwise consent, the aggregate amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment shall in no event be less than One Million Dollars ($1,000,000.00), provided, however, that such minimum amount shall not apply if either (x) the assignee is an Affiliate or Related Fund of the Assigning Lender or (y) the Lender is assigning its entire remaining interest in the Loan, (iv) the Agent shall receive from the assigning Lender a processing fee of Three Thousand Five Hundred Dollars ($3,500.00), provided, however, that such fee shall not apply if the assignee is an Affiliate or Related Fund of the Assigning Lender, and (v) if the assignment is less than the assigning Lender’s entire interest in the Loan, the assigning Lender must retain at least a One Million Dollar ($1,000,000.00) interest in the Loan, provided that such minimum shall not apply if the assignee is an Affiliate or Related Fund of the assigning Lender. The Agent may designate any Eligible Assignee accepting an assignment of a specified portion of the Loans to be a Co-Agent, an “Arranger” or similar title, but such designation shall not confer on such Assignee the rights or duties of the Agent. Upon

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such execution, delivery, approval and acceptance, and upon the effective date specified in the applicable Assignment and Assumption, (a) the Eligible Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption, have the rights and obligations of a Lender hereunder and under the other Loan Documents, and Borrower hereby agrees that all of the rights and remedies of Lenders in connection with the interest so assigned shall be enforceable against Borrower by such Eligible Assignee with the same force and effect and to the same extent as the same would have been enforceable but for such assignment, and (b) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights and be released from its obligations hereunder and thereunder thereafter accruing.

13.22.1 By executing and delivering an Assignment and Assumption, the assigning Lender thereunder and the Eligible Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) except as provided in such Assignment and Assumption, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document or any other instrument or document furnished in connection therewith; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under any Loan Document or any other instrument or document furnished in connection therewith; (iii) such Eligible Assignee confirms that it has received a copy of this Agreement together with such financial statements, Loan Documents and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into the Assignment and Assumption and to become a Lender hereunder; (iv) such Eligible Assignee will, independently and without reliance upon Agent, the assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such Eligible Assignee appoints and authorizes the Agent to take such action as the Agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto; and (vi) such Eligible Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

13.22.2 Agent shall maintain a copy of each Assignment and Assumption delivered to and accepted by it and shall record in its records the names and address of each Lender and the Commitment of, and Percentage of the Loans owing to, such Lender from time to time. Borrower, the Agent and Lenders may treat each entity whose name is so recorded as a Lender hereunder for all purposes of this Agreement.

13.22.3 Upon receipt of an Assignment and Assumption executed by an assigning Lender and an Eligible Assignee, Agent shall, if such Assignment and Assumption has been properly completed and consented to if required herein, accept such Assignment and Assumption, and record the information contained therein in its records, and the Agent shall use its best efforts to give prompt notice thereof to Borrower (provided that neither the Agent nor the Lenders shall be liable for any failure to give such notice).

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13.22.4 Borrower shall use reasonable efforts to cooperate with Agent and each Lender in connection with the assignment of interests under this Agreement or the sale of participations herein which shall be at no cost to the Borrower.

13.22.5 Anything in this Agreement to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements of this Agreement, including this Section, any Lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank or, in the case of a Lender which is a fund, to any holders of obligations owed or securities issued by such Lender or any trustee for or other representatives of such holders; provided that no such pledge or assignment shall release such Lender from its obligations hereunder. To facilitate any such pledge or assignment, the Agent shall, at the request of such Lender, enter into a letter agreement with the Federal Reserve Bank in, or substantially in, the form of the exhibit to Appendix C to the Federal Reserve Bank of New York Operating Circular No. 12.

13.22.6 Anything in this Agreement to the contrary notwithstanding, any Lender may assign all or any portion of its rights and obligations under this Agreement to another branch or affiliate of such Lender without first obtaining the approval of any Agent or the Borrower, provided that (i) such Lender remains liable hereunder unless the Borrower and Agent shall otherwise agree, (ii) at the time of such assignment such Lender is not a Defaulting Lender, (iii) such Lender gives the Agent and Borrower at least fifteen (15) days’ prior written notice of any such assignment; (iv) the parties to each such assignment execute and deliver to Agent an Assignment and Assumption, and (v) the Agent receives from the assigning Lender a processing fee of One Thousand Five Hundred Dollars ($1,500).

13.22.7 Each Lender shall have the right, without the consent of the Borrower, to sell participations to one or more Eligible Assignees, or an Affiliate or Related Fund of the assigning Lender, in or to all or a portion of its rights and obligations under the Facility and the Loan Documents; provided, however, that (i) such Lender’s obligations under this Agreement (including without limitation its Commitment to Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations (iii) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and with regard to any and all payments to be made under this Agreement and (iv) the holder of any such participation shall not be entitled to voting rights under this Agreement or the other Loan Documents (but such holder may contract with the Lender selling such Eligible Assignee its interest in such Lender’s share of the Facility as to voting of such Lender’s interest under Section 13.26.2 but not under any other section of this Agreement, provided that any such agreement by a Lender shall bind only such Lender alone and not Borrower, the other Lenders or the Agent).

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13.22.8 No Eligible Assignee of any rights and obligations under this Agreement shall be permitted to subassign such rights and obligations. No participant in any rights and obligations under this Agreement shall be permitted to sell subparticipations of such rights and obligations.

13.22.9 Borrower acknowledges and agrees that Lenders may provide to any assignee or participant originals or copies of this Agreement, any other Loan Document and any other documents, instruments, certificates, opinions, insurance policies, letters of credit, reports, requisitions and other materials and information of every nature or description, and may communicate all oral information, at any time submitted by or on behalf of Borrower or received by any Lender in connection with the Facility or with respect to Borrower, provided that prior to any such delivery or communication, such Eligible Assignees or participants shall agree to preserve the confidentiality of any of the foregoing to the same extent that such Lender agreed to preserve such confidentiality. In order to facilitate assignments to Eligible Assignees and sales to Eligible Assignees, Borrower shall execute such further documents, instruments or agreements as Lenders may reasonably require; provided, that Borrower shall not be required (i) to execute any document or agreement which would materially decrease its rights, or materially increase its obligations, relative to those set forth in this Agreement or any of the other Loan Documents (including financial obligations, personal recourse, representations and warranties and reporting requirements), or (ii) to expend more than incidental sums of money or incidental administrative time for which it does not receive reasonable reimbursement in order to comply with any requests or requirements of any Lender in connection with such assignment or sale arrangement. In addition, Borrower agrees to reasonably cooperate fully with Lenders in the exercise of Lenders’ rights pursuant to this Section, including providing such information and documentation regarding Borrower as any Lender or any potential Eligible Assignee may reasonably request and to meet with potential Eligible Assignees in Borrower’s offices.

13.23 Several Liability. Anything contained in this Agreement to the contrary notwithstanding, the obligations of each Lender to Borrower under this Agreement are several and not joint and several; each Lender shall only be obligated to fund its Percentage of each disbursement to be made hereunder up to the amount of its Commitment. Failure of any Lender to fulfill its obligations hereunder shall not result in any other Lender becoming obligated to advance more than its Commitment, nor shall such failure release or diminish the obligations of any other Lender to fund its Commitment provided herein. During any time, and only during such time, as Agent is the sole Lender and has not assigned any portion or portions of its interest in the Loans to another Lender pursuant to an Assignment and Assumption Agreement, Agent in its individual capacity shall be liable for all of the obligations of the Lender under this Agreement and the other Loan Documents. From and after the date that Agent as the sole Lender assigns any portion or portions of its interest in the Loans to another Lender pursuant to an Assignment and Assumption Agreement, then Agent shall act as the Agent on behalf of itself as a Lender and the other Lenders.

13.24 Miscellaneous Assignment Provisions. Any assigning Lender shall retain its rights to be indemnified pursuant to Section 7.19 with respect to any claims or actions arising prior to the date of such assignment. If any assignee Lender is not incorporated under the laws of the United States of America or any state thereof, it shall prior to the date on which any interest or fees are payable hereunder or under any of the other Loan Documents for its account, deliver to the Borrower and the Agent certification as to its exemption from deduction or withholding of any United States federal income taxes.

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13.25 Assignment by Borrower. The Borrower shall not assign or transfer any of its rights or obligations under any of the Loan Documents.

13.26 Consents and Approvals.

13.26.1 Each of the following shall require the approval or consent of the Required Lenders:

(a) The exercise by Agent and/or Lenders of any rights and remedies under the Loan Documents following an Event of Default, provided that absent any direction from the Required Lenders, Agent may exercise any right or remedy under the Loan Documents as Agent may determine in good faith to be necessary or appropriate to protect the Lenders or the collateral securing the Loan;

(b) Appointment of a successor Agent;

(c) Approval of Post-Default Plan (defined in Section 13.6.4); and

(d) Except as referred to in Section 13.26.2 below, approval of any amendment or modification of this Agreement or any of the other Loan Documents, or issuance of any waiver of any material provision of this Agreement or any of the other Loan Documents;

13.26.2 Each of the following shall require the approval or consent of each Lender adversely affected thereby:

(a) Extension of the Maturity (beyond any extension permitted herein) or forgiveness of all or any portion of the principal amount of the Loan or any accrued interest thereon, or any other amendment of this Agreement or the other Loan Documents which would reduce the interest rate options or the rate at which fees are calculated or forgive any loan fee, or extend the time of payment of any principal, interest or fees;

(b) Reduction of the percentage specified in the definition of Required Lenders;

(c) Increasing the amount of the Facility or any non-consenting Lender’s Commitment;

(d) Release of any lien on any material collateral (except as Borrower is entitled to under the Loan Documents);

(e) The release or forgiveness of any Guarantor unless such release is in connection with an approved removal of a Borrowing Base Asset pursuant to Section 3.4;

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(f) Amendment of the provisions of this Section 13.26;

(g) Amendment of the Mandatory Prepayment Events;

(h) Modification of Section 13.5.2 on the distribution of Liquidation Proceeds; and

(i) Amendment of what or how much is allowed as (i) Permitted Liens on the Individual Properties or any other Collateral for the Loan, or (ii) Permitted Debt.

No amendment, waiver or consent, unless in writing and signed by the Agent, in such capacity, in addition to the Lenders required hereinabove to take such action, shall affect the rights or duties of the Agent under this Agreement or any of the other Loan Documents. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that (a) the Commitment of such Lender may not be increased or extended without the consent of such Lender, and (b) no such amendment, waiver or consent may uniquely and negatively impact such Defaulting Lender without the approval of such Defaulting Lender.

13.26.3 In addition to the required consents or approvals referred to in Sections 13.26.1 and 13.26.2 above, the Agent may at any time request instructions from the Required Lenders with respect to any actions or approvals which, by the terms of this Agreement or of any of the Loan Documents, the Agent is permitted or required to take or to grant without instructions from any Lenders, and if such instructions are promptly requested, the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever for refraining from taking any action or withholding any approval under any of the Loan Documents until it shall have received such instructions from the Required Lenders. Without limiting the foregoing, no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Required Lenders or, where applicable, all Lenders. The Agent shall promptly notify each Lender at any time that the Required Lenders have instructed the Agent to act or refrain from acting pursuant hereto.

13.26.4 Each Lender authorizes and directs the Agent to enter into the Loan Documents other than this Agreement for the benefit of the Lenders. Each Lender agrees that any action taken by the Agent at the direction or with the consent of the Required Lenders in accordance with the provisions of this Agreement or any other Loan Document, and the exercise by the Agent at the direction or with the consent of the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all Lenders, except for actions specifically requiring the approval of all Lenders. All communications from the Agent to the Lenders requesting Lenders’ determination, consent, approval or disapproval (i) shall be given in the form of a written notice to each Lender, (ii) shall be accompanied by a description of the matter or item as to which such determination, approval, consent or disapproval is requested, or shall advise

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each Lender where such matter or item may be inspected, or shall otherwise describe the matter or issue to be resolved, (iii) shall include, if reasonably requested by a Lender and to the extent not previously provided to such Lender, written materials and a summary of all oral information provided to the Agent by Borrower in respect of the matter or issue to be resolved, and (iv) shall include the Agent’s recommended course of action or determination in respect thereof. Each Lender shall reply promptly, but in any event within ten (10) Business Days after receipt of the request therefor from the Agent (the “Lender Reply Period”). Unless a Lender shall give written notice to the Agent that it objects to the recommendation or determination of the Agent (together with a written explanation of the reasons behind such objection) within the Lender Reply Period, such Lender shall be deemed to have approved of or consented to such recommendation or determination. With respect to decisions requiring the approval of the Required Lenders or all Lenders, the Agent shall upon receiving the required approval or consent follow the course of action or determination recommended to the Lenders by the Agent or such other course of action recommended by the Required Lenders. Where this Loan Agreement or any other Loan Document requires that Borrower deliver any documentation to Agent or any Lenders, the Borrower shall deliver the same to Agent and Agent shall promptly deliver copies of the same to each of the Lenders.

13.27 Lead Arranger. Notwithstanding the provisions of this Agreement or of the other Loan Documents, the Lead Arranger shall have no powers, rights, duties, responsibilities or liabilities with respect to this Agreement and the other Loan Documents. To the extent requested by the Agent, the Lead Arranger has coordinated, or will coordinate, the initial syndication of the Facility and the assignment of interests in the Facility.

ARTICLE 14
GENERAL PROVISIONS

14.1 Notices. Any notice or other communication in connection with this Loan Agreement, the Note, the Security Documents, or any of the other Loan Documents, shall be in writing, and (i) deposited in the United States Mail, postage prepaid, by registered or certified mail, or (ii) hand delivered by any commercially recognized courier service or overnight delivery service such as Federal Express, or (iii) sent by facsimile transmission if a FAX Number is designated below addressed:

If to the Borrower:

WRT REALTY L.P.
7 Bulfinch Place, Suite 500, P.O. Box 9507
Boston, Massachusetts 02114
Attention: Carolyn Tiffany, President
FAX Number: (617) 570-4710

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with copies by regular mail or such hand delivery or facsimile transmission to:

Post Heymann & Koffler LLP
Two Jericho Plaza, Wing A, Suite 211
Jericho, New York 11753
Attention: David J. Heymann, Esquire
FAX Number: (516) 433-2777

If to Agent:

KEYBANK NATIONAL ASSOCIATION
4900 Tiedemann Road
Brooklyn, Ohio 44144
Attention: David W. Lenhart and Matt Himes
FAX Number: 216-813-6943

And

KEYBANK NATIONAL ASSOCIATION
225 Franklin Street
Boston, Massachusetts 02110
Attention: Ms Jane E. McGrath
FAX Number: 617 385-6293

with copies by regular mail or such hand delivery or facsimile transmission to:

Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attention: Kevin J. Lyons, Esquire
FAX Number: (617) 880-3433

If to LENDERS:

KEYBANK NATIONAL ASSOCIATION
4900 Tiedemann Road
Brooklyn, Ohio 44144
Attention: David W. Lenhart and Matt Himes
FAX Number: 216-813-6943

And

KEYBANK NATIONAL ASSOCIATION
225 Franklin Street
Boston, Massachusetts 02110
Attention: Ms. Jane E. McGrath
FAX Number: 617 385-6293

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with copies by regular mail or such hand delivery or facsimile transmission to:

Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attention: Kevin J. Lyons, Esquire
FAX Number: (617) 692-3433

If to any other Lender, to the addresses set forth on the signature page or to such addresses as set forth in the Assignment and Acceptance.

Any such addressee may change its address for such notices to such other address in the United States as such addressee shall have specified by written notice given as set forth above. All periods of notice shall be measured from the deemed date of delivery.

A notice shall be deemed to have been given, delivered and received for the purposes of all Loan Documents upon the earliest of: (i) if sent by such certified or registered mail, on the third Business Day following the date of postmark, or (ii) if hand delivered at the specified address by such courier or overnight delivery service, when so delivered or tendered for delivery during customary business hours on a Business Day, or (iii) if so mailed, on the date of actual receipt as evidenced by the return receipt, or (iv) if so delivered, upon actual receipt, or (v) if facsimile transmission is a permitted means of giving notice, upon receipt as evidenced by confirmation.

14.2 Limitations on Assignment. The Borrower may not assign this Agreement or the monies due thereunder without the prior written consent of all of the Lenders in each instance, but in such event Lenders may nevertheless at their option make the Loans under this Agreement to the Borrower or to those who succeed to the title of the Borrower and all sums so advanced by Lenders shall be deemed a Loan under this Agreement and not to be modifications thereof and shall be secured by all of the Collateral for the subject’s Borrower’s Obligations given at any time in connection herewith.

14.3 Further Assurances. The Borrower shall upon request from Agent from time to time execute, seal, acknowledge and deliver such further instruments or documents which Agent may reasonably require to better perfect and confirm its rights and remedies hereunder, under the Notes, under the Security Documents and under each of the other Loan Documents.

14.4 Payments. All payments under the Note shall be applied first to the payment of all fees, expenses and other amounts due to the Agent (excluding principal and interest) and, to the extent reimbursement is provided for herein, the Lenders, then to accrued interest, and the balance on account of outstanding principal under the Note; provided, however, that after an Event of Default, Liquidation Proceeds will be applied to the Obligations of the Borrower to Agent and the Lenders as otherwise provided for herein.

14.5 Parties Bound. The provisions of this Agreement and of each of the other Loan Documents shall be binding upon and inure to the benefit of the Borrower, the Agent and each of the Lenders and their respective successors and assigns, except as otherwise prohibited by this Agreement or any of the other Loan Documents.

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This Agreement is a contract by and among the Borrower, the Agent and each of the Lenders for their mutual benefit, and no third person shall have any right, claim or interest against either Agent, any of the Lenders or the Borrower by virtue of any provision hereof.

14.6 Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial.

14.6.1 Substantial Relationship. It is understood and agreed that all of the Loan Documents were negotiated, executed and delivered in The Commonwealth of Massachusetts, which Commonwealth the parties agree has a substantial relationship to the parties and to the underlying transactions embodied by the Loan Documents.

14.6.2 Place of Delivery. The Borrower agrees to furnish to Agent at the Agent’s office in Boston, Massachusetts all further instruments, certifications and documents to be furnished hereunder.

14.6.3 Governing Law. This Agreement and each of the other Loan Documents shall in all respects be governed, construed, applied and enforced in accordance with the internal laws of The Commonwealth of Massachusetts without regard to principles of conflicts of law.

14.6.4 Consent to Jurisdiction. The Borrower hereby consents to personal jurisdiction in any state or Federal court located within The Commonwealth of Massachusetts.

14.6.5 JURY TRIAL WAIVER. THE BORROWER, AGENT, AND EACH OF THE LENDERS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS LOAN AGREEMENT, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF AGENT OR ANY LENDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, INDIRECT, SPECULATIVE, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.

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14.7 Survival. All representations, warranties, covenants and agreements of the Borrower, or a Loan Party, herein or in any other Loan Document, or in any notice, certificate, or other paper delivered by or on behalf of the Borrower or a Loan Party pursuant hereto are significant and shall be deemed to have been relied upon by Agent and each of the Lenders notwithstanding any investigation made by Agent or any of the Lenders or on its behalf and shall survive the delivery of the Loan Documents and the making of the Loans pursuant thereto. No review or approval by Agent or the Lenders or any of their representatives, of any opinion letters, certificates by professionals or other item of any nature shall relieve the Borrower or anyone else of any of the obligations, warranties or representations made by or on behalf of Borrower or a Loan Party, or any one or more of them, under any one or more of the Loan Documents.

14.8 Cumulative Rights. All of the rights of Agent and the Lenders hereunder and under each of the other Loan Documents and any other agreement now or hereafter executed in connection herewith or therewith, shall be cumulative and may be exercised singly, together, or in such combination as Agent may determine in its sole good faith judgment.

14.9 Claims Against Agent or Lenders.

14.9.1 Borrower Must Notify. The Agent and each of the Lenders shall not be in default under this Agreement, or under any other Loan Document, unless a written notice specifically setting forth the claim of the Borrower shall have been given to Agent and each of the Lenders within thirty (30) days after the subject Borrower first had actual Knowledge or actual notice of the occurrence of the event which Borrower alleges gave rise to such claim and Agent or any of the Lenders does not remedy or cure the default, if any there be, with reasonable promptness thereafter. Such actual Knowledge or actual notice shall refer to what was actually known by, or expressed in a written notification furnished to, any of the persons or officials referred to in Exhibit D as Authorized Representatives.

14.9.2 Remedies. If it is determined by the final order of a court of competent jurisdiction, which is not subject to further appeal, that Agent or any of the Lenders has breached any of its obligations under the Loan Documents and has not remedied or cured the same with reasonable promptness following notice thereof, Agent’s and each of the Lenders’ responsibilities shall be limited to: (i) where the breach consists of the failure to grant consent or give approval in violation of the terms and requirements of a Loan Document, the obligation to grant such consent or give such approval and to pay the Borrower’s reasonable costs and expenses including, without limitation, reasonable attorneys’ fees and disbursements in connection with such court proceedings; and (ii) the case of any such failure to grant such consent or give such approval, or in the case of any other such default by Agent or any of the Lenders, where it is also so determined that Agent or any of the Lenders acted in bad faith, the payment of any actual, direct, compensatory damages sustained by the Borrower as a result thereof plus the Borrower’s reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements in connection with such court proceedings.

14.9.3 Limitations. In no event, however, shall Agent and each of the Lenders be liable to the Borrower or to any Loan Party or anyone else for other damages such as, but not limited to, indirect, speculative, special, exemplary, punitive or consequential damages whatever the nature of the breach by Agent or any of the Lenders of its obligations under this Loan Agreement or under any of the other Loan Documents. In no event shall Agent or any of the Lenders be liable to the Borrower or to any Loan Party or anyone else unless a written notice specifically setting forth the claim of the Borrower shall have been given to Agent and each of the Lenders within the time period specified above.

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14.10 Regarding Consents. Except to the extent expressly provided herein, any and all consents to be made hereunder by the Agent, Required Lenders, or Lenders shall be in the discretion of the Party to whom consent rights are given hereunder.

14.11 Obligations Absolute. Except to the extent prohibited by applicable law which cannot be waived, the Obligations of the Borrower and the obligations of each Guarantor and the other Loan Parties under the Loan Documents shall be joint and several, absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms of the Loan Documents to which such Loan Party is a party under all circumstances whatsoever, including, without limitation, the existence of any claim, set off, defense or other right which the Borrower or any Loan Party may have at any time against Agent or any of the Lenders whether in connection with the Loan or any unrelated transaction.

14.12 Table of Contents, Title and Headings. Any Table of Contents, the titles and the headings of sections are not parts of this Loan Agreement or any other Loan Document and shall not be deemed to affect the meaning or construction of any of its or their provisions.

14.13 Counterparts. This Loan Agreement and each other Loan Document may be executed in several counterparts, each of which when executed and delivered is an original, but all of which together shall constitute one instrument. In making proof of this agreement, it shall not be necessary to produce or account for more than one such counterpart which is executed by the party against whom enforcement of such loan agreement is sought.

14.14 Satisfaction of Commitment. The Facility being established pursuant to the terms hereof and of the other Loan Documents is being made in satisfaction of Agent’s and each of the Lenders’ obligations under the terms letter dated February 15, 2011. The terms, provisions and conditions of this Agreement and the other Loan Documents supersede the provisions of the terms letter.

14.15 Time Of the Essence. Time is of the essence of each provision of this Agreement and each other Loan Document.

14.16 No Oral Change. This Loan Agreement and each of the other Loan Documents may only be amended, terminated, extended or otherwise modified by a writing signed by the party against which enforcement is sought (except no such writing shall be required for any party which, pursuant to a specific provision of any Loan Document, is required to be bound by changes without such party’s assent). In no event shall any oral agreements, promises, actions, inactions, knowledge, course of conduct, course of dealings or the like be effective to amend, terminate, extend or otherwise modify this Loan Agreement or any of the other Loan Documents.

14.17 Patriot Act. The Lenders and the Agent each hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain, verify and record information that identifies the Borrower and each other Loan Party, which information includes the name and address of the Borrower and each Loan Party and other information that will allow such Lender or the Agent, as applicable, to identify the Borrower and each Loan Party in accordance with such Act.

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14.18 Electronic Information.

14.18.1 Documents required to be delivered pursuant to the Loan Documents may be delivered by electronic communication and delivery, including, the Internet, e-mail or intranet websites to which the Agent and each Lender have access (including a commercial, third-party website such as www.sec.gov <http://www.sec.gov> or a website sponsored or hosted by the Agent or the Borrower) provided that the foregoing shall not apply to (i) notices to any Lender pursuant to Article II. and (ii) any Lender that has notified the Agent and the Borrower that it cannot or does not want to receive electronic communications. The Agent or the Borrower may, in their discretion, agree to accept notices and other communications to them hereunder by electronic delivery pursuant to procedures approved by them for all or particular notices or communications. Documents or notices delivered electronically shall be deemed to have been delivered twenty-four (24) hours after the date and time on which the Agent or the Borrower post such documents or the documents become available on a commercial website and the Agent or Borrower notify each Lender of said posting and provides a link thereto provided if such notice or other communication is not sent or posted during the normal business hours of the recipient, said posting date and time shall be deemed to have commenced as of 10:00 a.m. Eastern time on the opening of business on the next business day for the recipient. No Indemnified Party shall be liable for any damages arising from the use by third parties of any information or other materials obtained by such third party through IntraLinks or other similar information transmission systems in connection with this Agreement. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the certificate required by Section 7.2(c) to the Agent and shall deliver paper copies of any documents to the Agent or to any Lender that requests such paper copies until a written request to cease delivering paper copies is given by the Agent or such Lender. Except for the certificates required by Section 7.2(c), the Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents delivered electronically, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery. Each Lender shall be solely responsible for requesting delivery to it of paper copies and maintaining its paper or electronic documents. The Borrower shall cooperate with the Agent in connection with the publication of certain materials and/or information provided by or on behalf of the Borrower. Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of the Borrower to the Agent and the Lenders (collectively, “Information Materials”) pursuant to this Article and the Borrower shall designate Information Materials (a) that are either available to the public or not material with respect to the Borrower and its Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information”.

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14.18.2 Documents required to be delivered pursuant to Article II. may be delivered electronically to a website provided for such purpose by the Agent pursuant to the procedures provided to the Borrower by the Agent.

14.19 Monthly Statements. While Agent may issue invoices or other statements on a monthly or periodic basis (a “Statement”), it is expressly acknowledged and agreed that: (i) the failure of Agent to issue any Statement on one or more occasions shall not affect the Borrower’s obligations to make payments under the Loan Documents as and when due; (ii) the inaccuracy of any Statement shall not be binding upon Lenders and so Borrower shall always remain obligated to pay the full amount(s) required under the Loan Documents as and when due notwithstanding any provision to the contrary contained in any Statement; (iii) all Statements are issued for information purposes only and shall never constitute any type of offer, acceptance, modification, or waiver of the Loan Documents or any of Lenders’ rights or remedies thereunder; and (iv) in no event shall any Statement serve as the basis for, or a component of, any course of dealing, course of conduct, or trade practice which would modify, alter, or otherwise affect the express written terms of the Loan Documents.

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IN WITNESS WHEREOF this Agreement has been duly executed and delivered as a sealed instrument at Boston, Massachusetts, as of the date first written above.

BORROWER:	WRT REALTY L.P., a Delaware limited partnership By: Winthrop Realty Trust, general partner
	By:
		Name:	Carolyn Tiffany
		Title:	President

S-1

AGENT:	KEYBANK NATIONAL ASSOCIATION, a national banking association
	By:
		Jane E. McGrath
		Vice President

LENDER:	KEYBANK NATIONAL ASSOCIATION, a national banking association
	By:
		Jane E. McGrath
		Vice President

S-2

EXHIBITS:

Section
Reference
Number
Exhibit A — Definitions		1.1
Exhibit B — Form of Assignment and Assumption		13.22
Exhibit C — Form of Note		3.2
Exhibit D — Authorized Representatives	4.1, 14.9, Exhibit A
Exhibit E — Required Property, Hazard and Other Insurance		6.19, 7.5.1
Exhibit F — Ownership Interests and Taxpayer Identification Numbers		6.4	(a)
Exhibit G-1 — Form of Compliance Certificate.		7.2	(c)
Exhibit G-2 — Form of Financial Covenant Compliance Certificate.
Exhibit G-3 — Form of Borrowing Base Certificate.		7.2	(c)
Exhibit H — Form of Notice of Rate Selection		2.4.3
Exhibit I — Lenders’ Commitments	Exhibit A
Exhibit K — Loan Agenda	Exhibit A
Exhibit M — Pledged Subsidiaries	Exhibit A
Exhibit N — Pledged Securities		3.1.2

EXHIBIT A TO LOAN AGREEMENT
DEFINITIONS

Accounts shall mean, collectively, the Depository Accounts.

Additional Collateral as defined in Section 3.3.

Adjusted Earnings shall mean the REIT’s net income (loss) (computed in accordance with GAAP) excluding gains (or losses) from debt restructurings and sales of real property, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures, as set forth in more detail under the definitions and interpretations thereof relative to funds from operations promulgated by the National Association of Real Estate Investment Trusts or its successor, adjusted for (i) the pro rata share of straight line rents, (ii) less the pro rata share of all regularly scheduled principal amortization payments (other than any final “balloon” payments due at maturity) and (iii) less the pro rata share of allowances for tenant improvements and leasing costs.

Adjusted LIBOR Rate shall mean for any LIBOR Rate Interest Period, an interest rate per annum equal to the sum of (A) the rate obtained by dividing (x) the LIBOR Rate for such LIBOR Rate Interest Period by (y) a percentage equal to one hundred percent (100%) minus the Reserve Percentage for such LIBOR Rate Interest Period and (B) the Applicable Margin.

Adjusted LIBOR Rate Advance shall mean any principal outstanding under this Agreement which pursuant to this Agreement bears interest at the Adjusted LIBOR Rate.

Adjusted Prime Rate means the per annum rate of interest equal to the sum of (a) the Applicable Margin for Prime Rate Advances and (b) the greater of (i) the Prime Rate, (ii) the Federal Funds Effective Rate plus one percent (1.0%), or (iii) the then-applicable LIBOR Rate for a one month interest period plus one percent (1.00%) per annum. Any change in the Adjusted Prime Rate resulting from a change in the Prime Rate, the Federal Funds Effective Rate or the LIBOR Rate shall become effective as of 12:01 a.m. on the Business Day on which each such change occurs.

Adjusted Prime Rate Advance. The term “Adjusted Prime Rate Advance” means any principal amount outstanding under this Agreement which pursuant to this Agreement bears interest at the Adjusted Prime Rate.

Affiliate shall mean, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (i) to vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

Agent. KEYBANK NATIONAL ASSOCIATION, acting as agent for the Lenders.

Agreement as defined in the Preamble.

Exhibit A-1

Applicable Margin shall mean the amount specified below for each Adjusted Prime Rate Advance or LIBOR Rate Advance, as applicable:

Applicable Margin	Applicable Margin
LIBOR Rate Option	Adjusted Prime Rate Option
3.00%		1.50	%

Applicable Rate as defined in Section 2.4.1.

Appraisal as defined in Section 7.18.

Arranger shall mean KEYBANC CAPITAL MARKETS.

Authorized Representatives as defined in Section 4.1 and listed on Exhibit D.

Availability as defined in Section 2.1.1.

Borrower as defined in the Preamble.

Borrower Subsidiaries shall mean all of the Subsidiaries of the Borrower, and all Subsidiaries of Subsidiaries of the Borrower, including, without limitation, the entities as listed on Exhibit F (except as otherwise indicated).

Borrowing shall mean the borrowing of a portion of Facility from all the Lenders on a given date (or the conversion of a Loan or Loans of a Lender or Lenders on a given date).

Borrowing Base shall mean, as determined by the Agent, the lesser of (1) the aggregate of (a) sixty percent (60%) of the Value of each wholly owned Stabilized Individual Property which is a Borrowing Base Asset, (b) forty percent (40%) of the Value of wholly owned non-Stabilized Individual Property which is a Borrowing Base Asset, (c) forty five percent (45%) of the market value of all Pledged Securities, (d) the Cash Percentage of the outstanding balances of the cash pledged as Collateral hereunder, which Borrowing Base Assets (or the equity interest therein, as applicable), in each instance, are pledged or otherwise subject to a lien in favor of the Agent in a manner acceptable to the Agent, (2) the Borrower’s Net Cash Flow divided by 0.12, or (3) the Mortgageability Amount.

Borrowing Base Asset shall mean each asset which is in the Borrowing Base Assets Pool, which Borrowing Base Asset (and, as applicable, any underlying Individual Property related thereto) is and shall at all times be unencumbered (or will be upon repayment of any Debt secured thereby upon acceptance as a Borrowing Base Asset).

Borrowing Base Assets Pool means all assets subject to a lien in favor the Agent and the Lenders hereunder and included within the Borrowing Base.

Exhibit A-2

Borrowing Base Property means each Individual Property as to which the Agent is granted a lien on such Individual Property or on the equity interests of the Property Owner of such Individual Property as Collateral hereunder.

Breakage Costs: (a) The cost to Lender of re-employing funds bearing interest at an Adjusted LIBOR Rate, incurred (or expected to be incurred) in connection with (i) any payment of any portion of the Loans bearing interest at an Adjusted LIBOR Rate prior to the termination of any applicable LIBOR Rate Interest Period, (ii) the conversion of an Adjusted LIBOR Rate to any other applicable interest rate on a date other than the last day of the relevant LIBOR Rate Interest Period, or (iii) the failure of Borrower to draw down, on the first day of the applicable LIBOR Rate Interest Period, any amount as to which Borrower has elected a LIBOR Rate Option and (b) any amounts payable by Borrower under any Interest Rate Agreement in connection with termination of such Agreement.

Business Day shall mean any day of the year on which offices of Agent are not required or authorized by law to be closed for business in Boston, Massachusetts. If any day on which a payment is due is not a Business Day, then the payment shall be due on the next day following which is a Business Day, and such extension of time shall be included in computing interest and fees in connection with such payment. Further, if there is no corresponding day for a payment in the given calendar month (i.e., there is no “February 30th”), the payment shall be due on the last Business Day of the calendar month.

Calculation Date as defined in Section 7.26.1(a)(i).

Calculation Period as defined in Section 7.26.1(a)(ii).

Capitalization Rate means 8.50%.

Cash Flow shall mean, in each calendar year, in each instance determined in a manner satisfactory to the Agent, the aggregate sum of (i) all revenues and cash receipts of the Borrower Subsidiaries less (ii) the sum of the Borrower Subsidiaries’ (a) property level operating expenses including but not limited to ground rent, (b) management fees and (c) administrative fees.

Cash Percentage shall mean (a) 100% with respect to cash pledged to the Agent and held in an account at the Agent, and (b) 90% with respect to cash pledged to the Agent and held in a third party institution subject to such control and another agreements as the Agent may require in order to perfect the Agent’s lien thereon.

Cash Management Agreement one or more cash management agreements to be entered into pursuant to Article ARTICLE 7.

Change of Control shall mean the occurrence of any of the following, as determined solely by the Agent (for purposes of this definition, ownership of interests in a Borrower that are subject to a Lien permitted under the Security Documents shall be deemed beneficially owned by the pledgor thereof):

1. Any Person (including affiliates of such Person, but excluding FUR Advisors LLC or any Affiliate thereof) or “group” (as such term is defined in applicable federal securities laws and regulations) shall acquire more than twenty-five percent (25%) of the common shares of the REIT (provided, however, it shall not be a Change in Control if a Change in Control would otherwise occur solely as a result of the conversion of any of the existing preferred shares of beneficial interest in the REIT) or;

Exhibit A-3

2. The Advisory Agreement with FUR Advisors LLC shall have been terminated unless either (i) the REIT and the Borrower shall become internally managed, or (ii) a replacement advisory agreement shall have been entered into so long as in either case the REIT and the Borrower will be managed by either (x) Michael L. Ashner, Carolyn Tiffany and Peter Braverman or (y) such other management personnel or company that has substantial experience and a reputation, in each case, equal to or better than that of the current management of the REIT and the Borrower, which determination shall be made in the sole discretion of the Agent.

Closing Date as defined in Article 5.

Code shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.

Collateral as defined in Section 3.1., together with any additional Collateral granted to the Agent as set forth in Section 3.3.

Commitment shall mean, with respect to each Lender, the amount set forth on Exhibit I hereto as the amount of such Lender’s commitment to make advances to the Borrower, as may be amended from time to time by the Agent as provided in Article 13 or in connection with any increase in the Total Commitment.

Consents as defined in Section 5.4.

Consolidated Debt Service as defined in Section 7.26.1(a)(iii).

Consolidated Debt Service Coverage as defined in Section 7.26.1(a)(iv)

Consolidated Entity or Consolidated Entities shall mean, singly and collectively, the Borrower, the REIT, and any wholly owned Subsidiary of the Borrower or the REIT.

Consolidated Leverage Ratio as defined in Section. 7.26.2.

Debt shall mean, with respect to any Person, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of such Person for the deferred purchase price of property or services (other than property and services purchased, and expense accruals and deferred compensation items arising, in the ordinary course of business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business), (iv) all indebtedness of such Person created or arising under any conditional sale or other title retention

Exhibit A-4

agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all obligations of such Person under leases which have been, or should be, in accordance with generally accepted Accounting principles, recorded as capital leases, to the extent required to be so recorded, (vi) all reimbursement, payment or similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or similar facilities (other than letters of credit in support of trade obligations or in connection with workers’ compensation, unemployment insurance, old-age pensions and other social security benefits in the ordinary course of business), (vii) all Debt in the nature of that referred to in clauses (i) through (vi) above which is guaranteed directly or indirectly by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss in respect of such Debt, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss in respect of such Debt, (viii) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any indebtedness referred to in clause (i) through (iv) above of any Person, either directly or indirectly, and (ix) all Debt referred to in clauses (i) through (vi) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien, security interest or other charge or encumbrance upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. Debt shall be adjusted to remove (i) any impact of intangibles pursuant to ASC 805, as codified by the Financial Accounting Standards Board in June of 2009, (ii) any impact from Asset Retirement Obligations pursuant to ASC 410, as codified by the Financial Accounting Standards Board in June of 2009, (iii) any potential impact from an accounting standard substantially similar to that proposed in the exposure draft issued by the Financial Accounting Standards Board in August of 2010 related to Leases (Topic 840), and (iv) any indebtedness that can be fully satisfied by issuing equity interests at Borrower’s option.

Debtor Relief Laws means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

Debt Service shall mean the annualized interest payment due under the Facility based on the higher of (a) the weighted average actual interest rates then in effect under the Facility, or (b) an eight percent (8%) debt service constant.

Debt Service Coverage shall mean the ratio of: (A) Net Cash Flow to (B) Debt Service.

Default as defined in Section 10.1.

Exhibit A-5

Defaulting Lender means any Lender that, as reasonably determined by the Agent, (a) has failed to perform any of its funding obligations hereunder, including in respect of its Loans, within three (3) Business Days of the date required to be funded by it hereunder and such failure is continuing, unless such failure arises out of a good faith dispute between such Lender and either the Borrower or the Agent, (b) (i) has notified the Borrower or the Agent that it does not intend to comply with its funding obligations hereunder or (ii) has made a public statement to that effect with respect to its funding obligations under other agreements generally in which it commits to extend credit, unless with respect to this clause (ii), such failure is subject to a good faith dispute, (c) has failed, within three (3) Business Days after request by the Agent, to confirm in a manner reasonably satisfactory to the Agent that it will comply with its funding obligations; provided that, notwithstanding the provisions of Section 13.5.3, such Lender shall cease to be a Defaulting Lender upon the Agent’s receipt of such confirmation, or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or a custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof, or the exercise of control over such Lender or any direct or indirect parent company thereof, in each case, by a Governmental Authority.

Default Rate as defined in Section 2.5.5.

Depository Account Pledge and Security Agreement as defined in Section 3.1.3.

Depository Accounts as defined in Section 3.1.3.

Distribution shall mean, with respect to any Person, that such Person has paid a dividend or returned any equity capital to its stockholders, members or partners or made any other distribution, payment or delivery of property (other than common stock or partnership or membership interests of such Person) or cash to its stockholders, members or partners as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock or any membership or partnership interests (or any options or warrants issued by such Person with respect to its capital stock or membership or partnership interests), or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock or any membership or partnership interests of such Person (or any options or warrants issued by such Person with respect to its capital stock or membership or partnership interests). Without limiting the foregoing, “Distributions” with respect to any Person shall also include all payments made by such Person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans, and any proceeds of a dissolution or liquidation of such Person.

Dollars shall mean lawful money of the United States.

Exhibit A-6

Eligible Assignee shall mean (i) any Lender; (ii) any commercial bank, savings bank, savings and loan association or similar financial institution which (A) has total assets of One Billion Dollars ($1,000,000,000) or more, (B) is “well capitalized” within the meaning of such term under the regulations promulgated under the auspices of the Federal Deposit Insurance Corporation Improvement Act of 1991, (C) in the sole judgment of the Agent, is engaged in the business of lending money and extending credit, and buying loans or participations in loans under credit facilities substantially similar to those extended under this Agreement, and (D) in the reasonable judgment of the Agent, is operationally and procedurally able to meet the obligations of a Lender hereunder to the same degree as a commercial bank; (iii) any insurance company in the business of writing insurance which (A) has total assets of One Billion Dollars ($1,000,000,000) or more (B) is “best capitalized” within the meaning of such term under the applicable regulations of the National Association of Insurance Commissioners, and (C) meets the requirements set forth in subclauses (C) and (D) of clause (ii) above; and (iv) any other financial institution having total assets of One Billion Dollars ($1,000,000,000) (including a mutual fund or other fund under management of any investment manager having under its management total assets of One Billion Dollars ($1,000,000,000) or more) which meets the requirement set forth in subclauses (C) and (D) of clause (ii) above; provided that each Eligible Assignee must (w) be organized under the Laws of the United States of America, any state thereof or the District of Columbia, or, if a commercial bank, be organized under the Laws of the United States of America, any state thereof or the District of Columbia, the Cayman Islands or any country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of such a country, (x) act under the Loan Documents through a branch, agency or funding office located in the United States of America, (y) be exempt from withholding of tax on interest and deliver the documents related thereto pursuant to the Internal Revenue Code as in effect from time to time and (z) not be the Borrower or an Affiliate of the Borrower.

Environmental Indemnity as defined in Section 3.1.6.

Environmental Laws as defined in the Environmental Indemnity.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

ERISA Affiliate shall mean each person (as defined in Section 3(9) of ERISA) which together with the Borrower or a Subsidiary of a Borrower would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

Event of Default as defined in Section 10.1.

Extended Maturity Date as defined in Section 2.2.

Extended Term as defined in Section 2.2.

Extension Fee as defined in Section 2.6.

Facility as defined in Section 1.3.

Facility Amount shall mean $50,000,000.00, subject to increase as set forth in Section 2.1.2.

Exhibit A-7

Federal Funds Effective Rate shall mean, for any day, the rate per annum (rounded upward to the nearest on one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of Cleveland on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate.”

Financial Covenants shall mean those covenants of the Borrower set forth in Section 7.26.

Fiscal Year shall mean each twelve month period commencing on January 1 and ending on December 31.

Fixed Charges as defined in Section 7.26.1(a)(v).

Fixed Charge Coverage as defined in Section 7.26.1(a)(vi).

Formation Documents shall mean, singly and collectively, the partnership agreements, joint venture agreements, limited partnership agreements, limited liability company or operating agreements and certificates of limited partnership and certificates of formation, articles (or certificate) of incorporation and by-laws and any similar agreement, document or instrument of any Person.

FT-Fin as defined in Section 3.1.4.

Funding Date shall mean the date the advance of the initial proceeds of the Loan.

GAAP means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination; provided that, for any calculations hereunder, to the extent GAAP requires balance sheet or income statement accounts to be stated at fair market value or any GAAP that changes lease accounting, the impact of such GAAP shall be excluded.

Governmental Authority shall mean any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

Guaranty as defined in Section 3.1.4.

Guarantor as defined in Section 1.4.

Hazardous Materials shall mean and include asbestos, flammable materials, explosives, radioactive substances, polychlorinated biphenyls, radioactive substances, other carcinogens, oil and other petroleum products, pollutants or contaminants that could be a detriment to the environment, and any other hazardous or toxic materials, wastes, or substances which are defined, determined or identified as such in any past, present or future federal, state or local laws, rules, codes or regulations, or any judicial or administrative interpretation of such laws, rules, codes or regulations.

Exhibit A-8

Indemnified Party as defined in Sections 7.19.

Indemnitor as defined in Section 3.1.6.

Independent shall mean, when used with respect to any Person, a Person who (i) is in fact independent, (ii) does not have any direct financial or indirect financial interest (other than amounts payable to such Person for serving as a director) in the Borrower, any Borrower Subsidiary, or any Loan Party or in any Affiliate of any thereof or in any constituent partner or member of the Borrower, any Borrower Subsidiary, or any Loan Party or any Affiliate of any thereof and (iii) is not connected with the Borrower, any Borrower Subsidiary, or any Loan Party or any Affiliate thereof or any constituent partner of the Borrower, any Borrower Subsidiary, or any Loan Party or any Affiliate of any thereof as an officer, employee, promoter, underwriter, trustee, partner, director, or person performing similar functions. Any such Person shall not be deemed to fail to comply with the requirements of clause (iii), above, solely due to such Person serving as an Independent director of the REIT. Whenever it is herein provided that any Independent Person’s opinion or certificate shall be provided, such opinion or certificate shall state that the Person executing the same has read this definition and is Independent within the meaning hereof.

Individual Property and Individual Properties shall mean, from time to time, each real estate property which is owned by, ground leased to or subject to a life estate in favor of a Borrower Subsidiary, together with all improvements, fixtures, equipment, and personalty relating to such property.

Initial Term as defined in Section 2.2.

Initial Maturity Date as defined in Section 2.2.

Interest Rate Agreement shall mean an Interest Rate Protection Product purchased by Borrower from Agent.

Interest Rate Protection Product shall mean an interest rate hedging product, such as a cap or swap.

Investment shall mean the acquisition of any real or tangible personal property or of any stock or other security, any loan, advance, bank deposit, money market fund, contribution to capital, extension of credit (except for accounts receivable arising in the ordinary course of business and payable in accordance with customary terms), or purchase or commitment or option to purchase or otherwise acquire real estate or tangible personal property or stock or other securities of any party or any part of the business or assets comprising such business, or any part thereof.

Knowledge shall mean with respect to the Borrower and any of their respective Subsidiaries, the knowledge of any of Michael Ashner, Peter Braverman, Thomas Staples, or Carolyn Tiffany, or any Person who shall at any time replace any of the foregoing.

Exhibit A-9

Late Charge as defined in Section 2.5.6.

Lease shall mean any lease relative to all or any portion of an Individual Property.

Legal Requirements shall mean all applicable federal, state, county and local laws, by-laws, rules, regulations, codes and ordinances, and the requirements of any governmental agency or authority having or claiming jurisdiction with respect thereto, including, but not limited to, all Environmental Laws, and those applicable to zoning, subdivision, building, health, fire, safety, sanitation, the protection of the handicapped, and environmental matters and shall also include all orders and directives of any court, governmental agency or authority having or claiming jurisdiction with respect thereto.

Lenders as defined in the Preamble.

Lender Reply Period as defined in Section 13.26.

LIBOR Business Day shall mean a Business Day on which dealings in U.S. dollars are carried on in the London Interbank Market.

LIBOR Rate means for any LIBOR Rate Interest Period therefor, the rate per annum (expressed to the fifth decimal place) equal to British Bankers Association LIBOR Rate (“BBA LIBOR”) from Reuters Screen LIBOR01 Page (or if such Reuters Screen is no longer available, such other commercially available source providing quotations of BBA LIBOR as may be designated by Administrative Agent from time to time) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such LIBOR Rate Interest Period. If for any reason such rate is not available, the term “LIBOR Rate” shall mean, for any Interest Period therefor, the rate per annum (expressed to the fifth decimal place) appearing on the Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such LIBOR Rate Interest Period for a term comparable to such LIBOR Rate Interest Period; provided, however, if more than one rate is specified on the Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. If for any reason none of the foregoing rates is available, LIBOR Rate shall be, for any LIBOR Rate Interest Period, the rate per annum reasonably determined by the Agent as the rate of interest at which Dollar deposits in the approximate amount of the LIBOR Rate Loan comprising part of such borrowing would be offered by the Agent to major banks in the London interbank Eurodollar market at their request at or about 11:00 a.m. (London time) two Business Days prior to the first day of such LIBOR Rate Interest Period for a term comparable to such LIBOR Rate Interest Period.

LIBOR Rate Interest Period shall mean with respect to each amount bearing interest at a LIBOR based rate, a period of one (1), two (2), or three (3) months, to the extent deposits with such maturities are available to Agent, commencing on a LIBOR Business Day, as selected by Borrower provided, however, that (i) any LIBOR Rate Interest Period which would otherwise end on a day which is not a LIBOR Business Day shall continue to and end on the next succeeding LIBOR Business Day, unless the result would be that such LIBOR Rate Interest Period would be extended to the next succeeding calendar month, in which case such LIBOR Rate Interest Period shall end on the next preceding LIBOR Business Day, (ii) any LIBOR Rate Interest Period which begins on a day for which there is no numerically corresponding date in the calendar month in which such LIBOR Rate Interest Period would otherwise end shall instead end on the last LIBOR Business Day of such calendar month, and (iii) Borrower may not select a LIBOR Rate Interest Period which would end after the Maturity Date.

Exhibit A-10

LIBOR Rate Option as defined in Section 2.4.

Lien shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and mechanic’s, materialmen’s and other similar liens and encumbrances.

Licenses and Permits shall mean all licenses, permits, authorizations and agreements issued by or agreed to by any governmental authority, including, but not limited to, building permits, occupancy permits and such special permits, variances and other relief as may be required pursuant to Legal Requirements which may be applicable to the Individual Property.

Liquid Assets shall mean the sum of the following unencumbered (other than by Liens held by the Agent on behalf of the Lenders) assets: (i) all cash (denominated in United States dollars), (ii) any demand deposits, (iii) marketable securities consisting of short-term (maturity of one year or less) obligations issued or guaranteed as to principal and interest by the United States of America, (iv) short-term certificates of deposit, with a maturity of one year or less, issued by any bank organized under the laws of the United States of America having total assets in excess of $1,000,000,000.00, (v) equity securities which are publicly traded on any nationally recognized exchange or trading platform including, without limitation, the New York Stock Exchange NYSE Amex Equities, NASDAQ or any successors thereto, and (vi) any other securities acceptable to the Agent as evidenced by the Agent’s written approval.

Liquidation Proceeds shall mean amounts received by the Agent and/or the Lenders in the exercise of the rights and remedies under the Loan Documents (including, but not limited to, all rents, profits and other proceeds received by the Agent and/or the Lenders from the liquidation of, or exercising rights upon the occurrence of an Event of Default relative to, any Collateral, but not including any amount bid at a foreclosure sale or on behalf of the Agent or otherwise credited to a Borrower in, any deed-in-lieu of foreclosure or similar transaction).

Loan and Loans as defined in Section 1.3.

Loan Agenda shall mean that Document Agenda respecting the establishment of the Facility annexed hereto as Exhibit K.

Loan Agreement as defined in the Preamble.

Loan Documents as defined in Section 3.1.

Exhibit A-11

Loan Party and Loan Parties shall mean, singly and collectively, the Borrower and each Borrower Subsidiary or other person executing a Loan Document in favor of the Agent, including pursuant to Section 3.3.

Management Agreements as defined in Section 6.9.

Mandatory Principal Prepayments as defined in Section 2.5.1(a).

Market Rent shall mean, at any point of determination, then current rentals being charged to new tenants for comparable quality space located on comparable quality property within the subject geographic area of the subject Individual Property, taking into account and giving effect to, without limitation, such considerations as size, location of the Individual Property, lease term and level and quality of building construction and space improvements, tenant allowances, and rent concessions, all as reasonably determined by the Agent.

Material Adverse Effect shall mean a material adverse effect on, determined separately with respect to the Borrower, (i) the business, assets, prospects, operations or financial or other condition of any of the Borrower and/or, taken as a whole, any of the other Loan Parties, including, without limitation, all Distributions (ii) the ability of Borrower, the Borrower Subsidiaries, and/or the other Loan Parties to perform any material Obligations or to pay any Obligations which it is obligated to pay in accordance with the terms hereof or of any other Loan Document, (iii) the rights of, or benefits available to, the Agent and/or any of the Lenders under any Loan Document or (iv) any Lien given to Agent and/or any of the Lenders on any material portion of the Collateral or the priority of any such Lien.

Maturity shall mean the Initial Maturity Date, or, if the Maturity Date has been extended pursuant to the provisions of the Loan Agreement, the applicable Extended Maturity Date, or in any instance, upon acceleration of the Facility, if the Facility has been accelerated by Lenders upon an Event of Default.

Maturity Date shall mean the Initial Maturity Date, or, if the Maturity Date has been extended pursuant to the provisions of the Loan Agreement, the applicable Extended Maturity Date.

Minimum Consolidated Net Worth as defined in Section 7.26.3.

Mortgageability Amount shall mean the maximum outstanding amount of Loans that provides Debt Service Coverage equal to 1.50 to 1.0.

Net Cash Flow shall mean, as of any date of determination, the annualized sum of (i) (a) all cash revenues from the Borrowing Base Assets, including, without limitation, all rents, management fees, ground rent, loan payments, distributions, common area maintenance charges, insurance premium and tax reimbursements and proceeds from rental interruption insurance, and recurring dividends and distributions related to the Pledged Securities less the aggregate of (ii) all operating costs and expenses (excluding any debt service) of the Borrower and all of the Borrower’s Subsidiaries which are Loan Parties related to such Borrowing Base Assets, amounts reserved for taxes and insurance, replacement reserves, and capital expenditures, all of the foregoing as reasonably determined by the Agent in a manner consistent with the procedures and methods utilized by the Agent in analyzing the financial information provided by the Borrower prior to the Closing Date.

Exhibit A-12

Net Operating Income shall mean, for any Individual Property and for a given period, the sum of the following (without duplication and determined on a consistent basis with prior periods): (a) rents and other revenues received in the ordinary course from such Individual Property (including proceeds of rent loss or business interruption insurance but excluding pre-paid rents and revenues and security deposits except to the extent applied in satisfaction of tenants’ obligations for rent) minus (b) all expenses paid (excluding interest and principal but including an appropriate accrual for property taxes and insurance) related to the ownership, operation or maintenance of such Individual Property, including but not limited to property taxes, assessments and the like, insurance, utilities, payroll costs, maintenance, repair and landscaping expenses, marketing expenses, and general and administrative expenses (including an appropriate allocation for legal, accounting, advertising, marketing and other expenses incurred in connection with such Individual Property, but specifically excluding general overhead expenses of the Borrower or any Subsidiary and any property management fees).

Net Worth shall mean the sum of the consolidated net worth of the REIT as evidenced by the REIT’s annual and quarterly SEC reports.

Note shall mean, singly and collectively, the Note or Notes payable to Agent on behalf of the Lenders in the original principal amount of Fifty Million Dollars ($50,000,000.00).

Obligations shall mean all indebtedness, obligations and liabilities of the Borrower to the Agent and/or any Lender existing on the date of this Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, assignment, operation of law or otherwise, arising or incurred under this Agreement, the Note, or any of the other Loan Documents, including, without limitation, under any Interest Rate Protection Agreement with the Agent with respect to the Loan.

OFAC shall mean the Office of Foreign Asset Control of the Department of the Treasury of the United States of America.

OFAC Review Process shall mean that certain review process established by Agent to determine if any potential transferee of any interests or any assignee of any portion of the Loans or any of their members, officers or partners area a party with whom Agent and any Lender are restricted from doing business under (i) the regulations of OFAC, including those Persons named on OFAC’s Specially Designated and Blocked Persons list, or (ii) any other statute, executive order or other governmental action or list (including the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism).

Officer’s Certificate shall mean a certificate delivered to the Agent by a Borrower, a Subsidiary of a Borrower, or a Guarantor, as the case may be, respectively, which is signed by an authorized officer thereof (or an authorized officer of the direct or indirect managing general partner or managing member, as applicable, of such Borrower, the Borrower Subsidiary, or such Guarantor, if and as applicable).

Exhibit A-13

One-Month LIBOR Rate as defined in Section 2.4.

Original Agreement as defined in the Preamble to this Agreement.

Payment Direction Letters as defined in Section 7.15.

PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

Percentage shall mean, with respect to each Lender, the amount set forth on Exhibit I hereto as the such Lender’s commitment percentage of the Total Commitment to make advances to the Borrower, as may be amended from time to time by the Agent as provided in Article 13 or in connection with any increase in the Total Commitment.

Permitted Debt as defined in Section 8.4.

Permitted Distributions as defined in Section 8.16.

Permitted Investments as defined in Section 8.17.

Permitted Liens as defined in Section 8.2.

Person shall mean any individual, corporation, partnership, joint venture, estate, trust, unincorporated association or limited liability company, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

Plan shall mean any multiemployer or single-employer plan as defined in Section 4001 of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) a Borrower or any Subsidiary of a Borrower or an ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which such Person or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.

Pledged Securities as defined in Section 3.1.2.

Prime Rate shall mean interest rate established from time to time by KeyBank National Association as its prime rate, whether or not such rate is publicly announced; the Prime Rate may not be the lowest interest rate charged by KeyBank National Association for commercial or other extensions of credit.

Pro Rata shall mean a calculation based on the percentage of the capital stock of or other equity interest in any Person owned, directly or indirectly, by the Borrower and/or the REIT. For the purposes of this definition, the Pro Rata share of a Consolidated Entity shall be deemed to be 100%.

Exhibit A-14

Property Owners shall mean, singly and collectively, each Borrower Subsidiary or other Person which owns the fee interest, land estate, or ground lease interest in any Borrowing Base Property.

REIT as defined in Section 1.2.

Related Documents shall mean, singly and collectively, the Formation Documents, the Payment Direction Letters, and the documents establishing and evidencing any Subsidiary Debt.

Related Fund shall mean, with respect to a Lender which is a fund that invests in loans, any other such fund managed by the same investment advisor as such Lender or by an Affiliate of such Lender or such advisor.

Reportable Event shall mean an event described in Section 4043(b) of ERISA with respect to a Plan other than those events as to which the 30-day notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 2615, or as otherwise now or hereafter defined in ERISA.

Required Lenders shall mean Lenders holding Percentages aggregating at least sixty six and two-thirds percent (66 2/3%).

Reserve Percentage shall mean for any LIBOR Rate Interest Period, that percentage which is specified three (3) Business Days before the first day of such LIBOR Rate Interest Period by the Board of Governors of the Federal Reserve System (or any successor) or any other governmental or quasi-governmental authority with jurisdiction over Lender for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirement) for Lender with respect to liabilities constituting of or including (among other liabilities) Eurocurrency liabilities in an amount equal to that portion of the Loans affected by such LIBOR Rate Interest Period and with a maturity equal to such LIBOR Rate Interest Period.

Security Documents as defined in Section 3.2.

Single-Purpose Entity shall mean, with respect to a Person, that such Person has Formation Documents which contain generally the following provisions (with such variations as required by the provisions of the Subsidiary Debt) , and has agreed to abide by such terms and conditions:

(a) Such Person shall not engage in any business or activity other than acquiring by merger the assets and liabilities of the applicable Property Owner.

(b) Such Person shall not acquire or own any material assets other than (i) the real property owned by the Subsidiary on the Closing Date, and (ii) such incidental personal property as may be necessary for the operation of such real property.

(c) Such Person shall not fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization or formation and under the applicable laws of any state or states in which the ownership of its assets or the conduct of its business requires such qualification.

(d) Such Person shall not incur any Debt, except as provided herein.

Exhibit A-15

(e) Such Person shall not merge into or consolidate with any person or entity or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure.

(f) Such Person shall not own any subsidiary or make any investment in any person or entity.

(g) Such Person shall not file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors.

(h) Such Person shall agree to abide by the following covenants in its management and operation:

(i) To maintain its records, books of account and bank accounts separate and apart from those of any other Person;

(ii) Not to commingle assets with those of any other Person;

(iii) Not to maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;

(iv) To maintain separate financial statements;

(v) To pay its own liabilities out of its own funds;

(vi) To observe all corporate, partnership or limited liability company formalities;

(vii) To maintain an arm’s-length relationship with its Affiliates;

(viii) To pay the salaries of its own employees and maintain a sufficient number of employees in light of its contemplated business operations;

(ix) Not to guarantee or become obligated for the debts of any other entity or hold out its credit as being available to satisfy the obligations of others, except as provided for herein;

(x) Not to acquire obligations or securities of its partners, members or shareholders;

(xi) To allocate and charge fairly and reasonably any overhead for shared office space or any common employee or overhead shared with affiliates;

(xii) To use separate stationery, invoices and checks;

(xiii) Not to pledge its assets for the benefit of any other entity or make any loan or advances to any entity, including any general partner or any affiliate thereof, except as provided for herein;

Exhibit A-16

(xiv) To hold itself out to the public as a legal entity separate and distinct from any other Person and to conduct its business solely in its own name in order not (A) to mislead others as to the identity with which such other Person is transacting business, or (B) to suggest that such Person is responsible for the debts of any third party (including any general partner or any affiliate thereof or any other Person);

(xv) To correct any known misunderstanding regarding its separate identity; and

(xvi) To maintain adequate capital and cash on hand for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.

Stabilized shall mean at least seventy percent (70%) of the leasable space in an Individual Property has been leased by the Property to a third party pursuant to an arms-length transaction based on market rents at the time such lease was executed.

State shall mean the State or Commonwealth in which the subject of such reference or any part thereof is located.

Statement as defined in Section 14.19.

Subsidiary shall mean, with respect to any Person, any corporation, association, limited liability company, partnership or other business entity of which securities or other ownership interests representing more than 50% of either (x) the beneficial ownership interest or (y) ordinary voting power are, at the time as of which any determination is being made, owned or controlled, directly or indirectly, by such Person; provided, however none of Sealy Airpark Nashville, L.P, Sealy Newmarket L.P, Sealy Northwest Atlanta L.P., Sealy Airpark Nashville General Partnership, Sealy Newmarket General Partnership and Sealy Northwest Atlanta Partners, L.P. will be considered a Subsidiary until such time as the Borrower or any other Subsidiary of the Borrower has direct or indirect control of the day to day management of such entity.

Subsidiary Debt shall mean all Debt now or hereafter incurred by any Subsidiary of the Borrower, or by an entity in which the Borrower or any Subsidiary has a debt or equity interest.

Subsidiary Debt Schedule as defined in Section 6.17.7.

Subsidiary Guarantor as defined in Section 1.4.

Title Reports as defined in Section 5.10(a).

Total Asset Value shall mean, as of the date of determination, the total assets of the REIT and its Subsidiaries, on a consolidated basis, each as determined in accordance with GAAP, but, as to the assets subject to the Repo Agreement, including only the value of such assets in excess of the debt outstanding under the Repo Agreement.

Total Commitment shall mean the sum of the Commitments of the Lenders, as in effect from time to time.

Exhibit A-17

UCC or the Uniform Commercial Code means the Uniform Commercial Code in effect in a State.

Unfunded Current Liability of any Plan means the amount, if any, by which the actuarial present value of the accumulated plan benefits under the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting Standards No. 35, based upon the actuarial assumptions used by the Plan’s actuary in the most recent annual valuation of the Plan.

United States and U.S. shall each mean the United States of America.

Unused Commitment Fee as defined in Section 2.6.2.

Value means, as of any date of determination, (a) with respect to (i) any Individual Property in the Borrowing Base Assets Pool owned by the Property Owner for greater than 12 months or (ii) any Individual Property in the Borrowing Base Assets Pool owned by the Property Owner for less than 12 months with respect to which there has been, in the reasonable determination of the Agent, material change in the operating economics of the Individual Property, (A) the Net Operating Income of such Property for the fiscal quarter most recently ended, times (B) 4 divided by (C) the Capitalization Rate and (b) with respect to any other Individual Property in the Borrowing Base Assets Pool, the value of such Individual Property based on cost determined in accordance with GAAP, (c) the fair market value of any Pledged Securities, and (d) the available balance of any cash pledged as Collateral hereunder.

Exhibit A-18

EXHIBIT F

SUBSIDIARIES

NAME OF ENTITY
5400 WESTHEIMER COURT, LLC
5400 WESTHEIMER HOLDING L.P.*
5400 WESTHEIMER LIMITED PARTNERSHIP*
FT-5400 NEW UNIT LENDER LLC
FT-5400 WESTHEIMER LLC
FT-AMHERST PROPERTY LLC
FT-AMHERST PROPERTY MANAGER LLC
FT-CHURCHILL PROPERTY L.P.
FT-CIRCLE TOWER LLC
FT-CIRCLE TOWER MANAGER LLC
FT-FIN ACQUISITION LLC
FT-FIN GP LLC
FT-FLORIDA PROPERTY LLC
FT-FLORIDA PROPERTY MANAGER LLC
FT-KRG (ATLANTA) LLC
FT-KRG (DENTON) LLC
FT-KRG (GREENSBORO) LLC
FT-KRG (KNOXVILLE) LLC
FT-KRG (LAFAYETTE) LLC
FT-KRG (LOUISVILLE) LLC
FT-KRG (MEMPHIS) LLC
FT-KRG (SEABROOK) LLC
FT-KRG (SHERMAN) LLC
FT-KRG (ST. LOUIS) LLC
FT-KRG PROPERTY L.P.
FT-MARC CLASS B LLC
FT-MARC LOAN LLC
FT-ONTARIO HOLDINGS LLC
FT-ONTARIO PARKING LLC
FT-ONTARIO PARKING MANAGER LLC
FT-ONTARIO PROPERTY LLC
FT-ONTARIO PROPERTY MANAGER LLC
FT-ORLANDO PROPERTY LLC
FT-ORLANDO PROPERTY MANAGER LLC
FT-WD PROPERTY LLC
MARC 29 E. MADISON LLC*
MARC MICHIGAN 30 LLC*
MARC 8 S. MICHIGAN LLC*
MARC BROOKS BUILDING LLC*
MARC 11 E. ADAMS LLC*
MARC RIVER ROAD LLC*
MARC HIGHPOINT PLAZA LLC*
MARC 1701 E. WOODFIELD ROAD LLC*
MARC SALT CREEK LLC*
MARC 3701 ALGONQUIN ROAD LLC*
900 RIDGEBROOK LLC*
MICHIGAN-180 LLC*
NEWBURY APARTMENTS LLC
NEWBURY PROPERTIES DE LLC
NY 46^TH STREET LENDER LLC
SEALY AIRPARK NASHVILLE GENERAL PARTNERSHIP*
SEALY NEWMARKET GENERAL PARTNERSHIP
SEALY NORTHWEST ATLANTA PARTNERS
WRT-1050 CORPORETUM HOLDINGS LLC
WRT-1050 CORPORETUM PROPERTY LLC

Exhibit F-1

WRT-1050 CORPORETUM PROPERTY MANAGER LLC
WRT-46^TH STREET GOTHAM LLC*
WRT-550/650 CORPORETUM PROPERTY LLC
WRT-550/650 CORPORETUM PROPERTY MANAGER LLC
WRT-701 ARBORETUM PROPERTY LLC
WRT-701 ARBORETUM PROPERTY MANAGER LLC
WRT-ANDOVER PROPERTY LLC
WRT-ANDOVER PROPERTY MANAGER LLC
WRT-ATLANTA LLC
WRT-CDH II LLC
WRT-CONCORD LLC
WRT-CROSSROADS LLC
WRT-CROSSROADS ONE LLC
WRT-DV LLC
WRT-LENDER LLC
WRT-MARC 180 NORTH WACKER LLC
WRT-MARC RC HOLDING LLC
WRT-MARC RC LAND LLC
WRT-MARC RC LLC
WRT-MOFFETT LLC
WRT-MT LLC
WRT-NASHVILLE AIRPARK LLC
WRT-PROPERTY HOLDINGS LLC
WRT-ROCKWELL LLC
WRT-ROIC RIVERSIDE LLC*
WRT-SD DRIVER LLC
WRT-SOUTH BURLINGTON PROPERTY LLC
WRT-SOUTH BURLINGTON PROPERTY MANAGER LLC
WRT-SPRINGING MEMBER LLC
WRT-TALF LLC
WRT-VHH LLC
WRT-WESTWOOD NOTEHOLDER LLC

* Not a Borrower Subsidiary

Exhibit F-2

[remaining exhibits and schedules omitted from filing]

EX-10.20

EXHIBIT 10.20

GUARANTY

GUARANTY, dated as of March 3, 2011 (the “Guaranty”), by each of the undersigned entities (collectively, the “Guarantor” or the “Guarantors”), in favor of KEYBANK NATIONAL ASSOCIATION, a national banking association having an address at 225 Franklin Street 18^th Floor, Boston, Massachusetts 02110, as agent (KeyBank National Association, in such capacity as agent, hereinafter referred to as “Agent”) for a syndicate of lenders (singly and collectively, the “Lenders”) as specifically provided in the Loan Agreement (as defined below).

INTRODUCTORY STATEMENT

WHEREAS, pursuant to that certain Amended and Restated Loan Agreement dated as of March 3, 2011 (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”) entered into by and among WRT REALTY L.P., a Delaware limited partnership (the “Borrower”), the Agent, and the Lenders, the Agent and the Lenders have agreed to make a loan to the Borrower in the aggregate principal amount of up to $150,000,000.00 (the “Loan”), upon the terms and subject to the conditions set forth therein.

WHEREAS, each Guarantor is an owner or subsidiary of the Borrower, and the lending of money and other extensions of the Obligations by the Agent and the Lenders to the Borrower will enhance and benefit the business activities and interests of each Guarantor by provide funding for the operation of each Guarantor and/or repaying indebtedness of certain of the Guarantors.

WHEREAS, as a condition to making the Loans, the Agent and the Lenders have required the Guarantor to execute and deliver this Guaranty, guaranteeing the payment and performance of all Obligations arising under or pursuant to the Loan Agreement.

NOW THEREFORE, in consideration of the premises and in order to induce the Agent and the Lenders to make the Loans and extend other financial accommodations under the Loan Agreement, the Guarantor hereby agrees as follows:

Section 1. Guaranty. The Guarantor hereby irrevocably and unconditionally guarantees the punctual payment when due, whether at stated maturity, after maturity, by acceleration or otherwise, and the punctual performance, of all present and future Obligations under the Loan Agreement and each other Loan Document, each as the same may be hereafter amended, modified, extended, renewed or recast, including but not limited to the payment of $150,000,000.00, together with interest and other charges thereon, as provided in the Loan Agreement and the Note executed thereunder, together with all amounts which may become due under any interest rate protection or swap arrangements entered into by the Borrower with the Agent (the foregoing being herein referred to as the “Guaranteed Obligations”).

-1-

Section 2. Waiver. The Guarantor hereby absolutely, unconditionally and irrevocably waives, to the fullest extent permitted by law, (a) promptness, diligence, notice of acceptance and any other notice with respect to this Guaranty, (b) presentment, demand of payment, protest, notice of dishonor or nonpayment and any other notice with respect to the Guaranteed Obligations, (c) any requirement that the Agent protect, secure, perfect or insure any security interest or Lien on any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral (other than Collateral pledged by the Borrower to the Agent, for its own benefit and the benefit of the other Lenders, pursuant to the Security Documents), (d) any and all right to assert any defense (other than the defense of indefeasible payment), set-off, counterclaim or cross-claim of any nature whatsoever with respect to this Guaranty (except as otherwise provided in Section 20(a)(iii) hereof), the obligations of the Guarantor hereunder or the obligations of any other person or party relating to this Guaranty or the obligations of the Guarantor hereunder or otherwise with respect to the Guaranteed Obligations in any action or proceeding brought by the Agent to collect the Guaranteed Obligations or any portion thereof or to enforce the obligations of the Guarantor under this Guaranty, and (e) any other action, event or precondition to the enforcement of this Guaranty or the performance by the Guarantor of the obligations hereunder.

Section 3. Guaranty Absolute.

(a) The Guarantor guarantees that, to the fullest extent permitted by law, the Guaranteed Obligations will be paid or performed strictly in accordance with their terms, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent with respect thereto.

(b) No invalidity, irregularity, voidability, voidness or unenforceability of the Loan Agreement, the Note, or any other Loan Document or any other agreement or instrument relating thereto, or of all or any part of the Guaranteed Obligations or of any security therefor shall affect, impair or be a defense to this Guaranty.

(c) This Guaranty is one of payment and performance, not collection, and the obligations of the Guarantor under this Guaranty are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any Affiliate or Subsidiary thereof or whether the Borrower or any Affiliate or Subsidiary thereof is joined in any such action or actions.

-2-

(d) The liability of the Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

(i) any change in the manner, place or terms of payment or performance, and/or any change or extension of the time of payment or performance of, renewal or alteration of, any Guaranteed Obligation, any security therefor, or any liability incurred directly or indirectly in respect thereof, or any other amendment or waiver of or any consent to departure from the Loan Agreement or the Note or any other Loan Document, including any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or any Subsidiary or Affiliate thereof or otherwise;

(ii) any sale, exchange, release, surrender, realization upon any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, all or any of the Guaranteed Obligations (other than the Collateral pledged to the Agent, for its own benefit and the benefit of the other Lenders, under the Security Documents), and/or any offset against such Guaranteed Obligations, or failure to perfect, or continue the perfection of, any Lien in any such property, or delay in the perfection of any such Lien, or any amendment or waiver of or consent to departure from any other guaranty for all or any of the Guaranteed Obligations;

(iii) any exercise or failure to exercise any rights against the Borrower or any Affiliate or Subsidiary thereof or others (including the Guarantor);

(iv) any settlement or compromise of any Guaranteed Obligation, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof;

(v) any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other assets of the Borrower or any Affiliate or Subsidiary thereof;

(vi) any change, restructuring or termination of the existence of the Borrower or any Affiliate or Subsidiary thereof;

(vii) the release of the Borrower or any other party, other than the Guarantor, now or hereafter liable upon or in respect of the Loan Documents; or

(viii) any other agreements or circumstance of any nature whatsoever which might otherwise constitute a defense available to, or a discharge of, this Guaranty and/or the obligations of the Guarantor hereunder, or a defense to, or discharge of, the Borrower or any Affiliate or Subsidiary thereof relating to this Guaranty or the obligations of the Guarantor hereunder or otherwise with respect to the Loan or other financial accommodations to the Borrower (other than the defense of indefeasible payment).

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(e) The Agent may at any time and from time to time (whether or not after revocation or termination of this Guaranty) without the consent of, or notice (except as shall be required by applicable statute and cannot be waived) to, the Guarantor, and without incurring responsibility to the Guarantor or impairing or releasing the obligations of the Guarantor hereunder, apply any sums by whomsoever paid or howsoever realized to any Guaranteed Obligation regardless of what Guaranteed Obligations remain unpaid.

(f) This Guaranty shall continue to be effective or be reinstated, as the case may be, if a claim is ever made upon the Agent for repayment or recovery of any amount or amounts received by the Agent in payment or on account of any of the Guaranteed Obligations as a result of laws relating to preferences, fraudulent transfers and fraudulent conveyances, and the Agent repays all or part of said amount by reason of any judgment, decree or order of any court or administrative body having jurisdiction over the Agent or its property, or any settlement or compromise of any such claim effected by the Agent with any such claimant (including the Borrower). In such event the Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon the Guarantor, notwithstanding any revocation hereof or the cancellation of any note (including the Note) or other instrument evidencing any Guaranteed Obligation, and the Guarantor shall be and remain liable to the Agent hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Agent.

Section 4. Continuing Guaranty. This Guaranty is a continuing one and shall (a) remain in full force and effect until the indefeasible payment and satisfaction in full of the Guaranteed Obligations, (b) be binding upon the Guarantor, its successors and assigns, and (c) inure to the benefit of, and be enforceable by, the Agent and the Lenders. All obligations to which this Guaranty applies shall be conclusively presumed to have been created in reliance hereon.

Section 5. Representations, Warranties and Covenants. The Guarantor hereby represents, warrants and covenants to and with the Agent and the Lenders that:

(a) The Guarantor has the power to execute and deliver this Guaranty and to incur and perform its obligations hereunder;

(b) The Guarantor has duly taken all necessary action to authorize the execution, delivery and performance of this Guaranty and to incur and perform its obligations hereunder;

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(c) No consent, approval, authorization or other action by, and no notice to or of, or declaration or filing with, any governmental or other public body, or any other Person, is required for the due authorization, execution, delivery and performance by the Guarantor of this Guaranty or the consummation of the transactions contemplated hereby;

(d) The execution, delivery and performance by the Guarantor of this Guaranty does not and will not, with the passage of time or the giving of notice or both, violate or otherwise conflict with any term or provision of any material agreement, instrument, judgment, decree, order or any statute, rule or governmental regulation applicable to the Guarantor or result in the creation of any Lien upon any of its properties or assets pursuant thereto;

(e) This Guaranty has been duly authorized, executed and delivered by the Guarantor and constitutes the legal, valid and binding obligation of the Guarantor, and is enforceable against the Guarantor in accordance with its terms, except as enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally, and general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law); and

(f) The granting of the Loan to the Borrower will constitute a material economic benefit to the Guarantor.

Section 6. Affirmative Covenants. The Guarantor covenants and agrees that, from the date hereof and so long as the Loan or the other Guaranteed Obligations remain outstanding, the Guarantor shall pay, perform, observe and otherwise comply with all of the affirmative covenants set forth in Article 7 of the Loan Agreement that have been made by the Borrower therein with respect to the Subsidiaries or the Loan Parties, but only to the extent that such covenants were made with respect to the Guarantor.

Section 7. Negative Covenants. The Guarantor covenants and agrees that, from the date hereof and so long as the Loan or the other Guaranteed Obligations remain outstanding, the Guarantor shall not take any action (or otherwise suffer or permit to occur any event) contrary to the negative covenants set forth in Article 8 of the Loan Agreement, as agreed by the Borrower therein with respect to the Subsidiaries or the Loan Parties, but only to the extent that such covenants were made with respect to the Guarantor.

Section 8. Expenses. The Guarantor will, upon demand, reimburse the Agent for any sums, costs, and expenses which the Agent and/or the Lenders may pay or incur pursuant to the provisions of this Guaranty or in enforcing this Guaranty or in enforcing payment of the Guaranteed Obligations or otherwise in connection with the provisions hereof, including court costs, collection charges, and reasonable attorneys’ fees, together with interest thereon as specified in Section 15 hereof.

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Section 9. Terms.

(a) All terms defined in the Uniform Commercial Code of The Commonwealth of Massachusetts (as amended and in effect from time to time, the “UCC”) and used herein shall have the meanings as defined in the UCC, unless the context otherwise requires.

(b) The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

(c) All references herein to Sections and subsections shall be deemed to be references to Sections and subsections of this Guaranty unless the context shall otherwise require.

Section 10. Amendments and Modification. No provision hereof shall be modified, altered or limited except by written instrument expressly referring to this Guaranty and to such provision, and executed by the party to be charged.

Section 11. Waiver of Subrogation Rights. Until such time as all the Guaranteed Obligations have been indefeasibly satisfied (including the expiration of any applicable voidable preference period under the federal bankruptcy laws), the Guarantor hereby waives and releases any and all rights and claims it may now or hereafter have or acquire against the Borrower that would constitute it a “creditor” of the Borrower for purposes of the federal bankruptcy laws, including all rights of subrogation against the Borrower and its property and all rights of indemnification, contribution and reimbursement from the Borrower and its property, regardless of whether such rights arise in connection with this Guaranty, by operation of law, pursuant to contract or otherwise.

Section 12. Remedies Upon Default.

(a) Upon the occurrence and during the continuance of any Event of Default, in addition to any other rights and remedies which the Agent and/or the Lenders may have hereunder or at law, and not in limitation thereof, the Agent may, without notice to or demand upon the Borrower or the Guarantor, declare any Guaranteed Obligations immediately due and payable, and shall be entitled to enforce the obligations of the Guarantor hereunder.

(b) The Agent’s rights under this Guaranty shall be in addition to, and not in limitation of, all of the rights and remedies of the Agent and/or the Lenders under the Loan Documents. All rights and remedies of the Agent and/or the Lenders shall be cumulative and may be exercised in such manner and combination as the Agent and/or the Lenders, respectively, may determine.

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Section 13. Set-Off. After the occurrence and during the continuance of any Event of Default, any Accounts, deposits, balances or other sums credited by or due from the Agent, any affiliate of the Agent, or any of the Lenders, or from any affiliate of any of the Lenders, to the Guarantor may to the fullest extent not prohibited by applicable law at any time or from time to time, without regard to the existence, sufficiency or adequacy of any other collateral, and without notice or compliance with any other condition precedent now or hereafter imposed by statute, rule of law or otherwise, all of which are hereby waived to the fullest extent permitted by law, be set off, appropriated and applied by the Agent against any or all of the Guaranteed Obligations irrespective of whether demand shall have been made, in such manner as the Agent in its sole and absolute discretion may determine. Within three (3) Business Days of making any such set off, appropriation or application, the Agent agrees to notify Guarantor thereof, provided the failure to give such notice shall not affect the validity of such set off or appropriation or application. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY OF THE LENDERS TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH ACCOUNTS, DEPOSITS, CREDITS OR OTHER PROPERTY OF THE GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

Section 14. Statute of Limitations. Any acknowledgment or new promise, whether by payment of principal or interest or otherwise and whether by the Borrower or others (including the Guarantor), with respect to any of the Guaranteed Obligations shall, if the statute of limitations in favor of the Guarantor against the Agent shall have commenced to run, toll the running of such statute of limitations and, if the period of such statute of limitations shall have expired, prevent the operation of such statute of limitations.

Section 15. Interest. All amounts payable from time to time by the Guarantor hereunder shall bear interest at the Default Rate, provided, that such interest shall not be duplicative of any obligations payable under the Loan Agreement.

Section 16. Rights and Remedies Not Waived. No act, omission or delay by the Agent shall constitute a waiver of its rights and remedies hereunder or otherwise. No single or partial waiver by the Agent of any default hereunder or right or remedy which it may have shall operate as a waiver of any other default, right or remedy or of the same default, right or remedy on a future occasion.

Section 17. Admissibility of Guaranty. The Guarantor agrees that any copy of this Guaranty signed by the Guarantor and transmitted by telecopier for delivery to the Agent shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence.

Section 18. Notices. All notices, requests and demands to or upon the Agent, the Lenders or the Guarantor under this Guaranty shall be in writing and given as provided in the Loan Agreement (and with respect to the Guarantor, c/o the Borrower at the address of the Borrower as set forth in the Loan Agreement).

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Section 19. Counterparts. This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original and all of which shall together constitute one and the same agreement.

Section 20. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC.

(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY SECURITY DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR OF THE UNITED STATES OF AMERICA FOR THE DISTRICT OF MASSACHUSETTS, AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (i) TRIAL BY JURY, (ii) TO THE EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (iii) THE RIGHT TO IMPOSE ANY SET-OFF, COUNTERCLAIM OR CROSS-CLAIM UNLESS SUCH SET-OFF, COUNTERCLAIM OR CROSS-CLAM COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR STATE PROCEDURAL LAWS, BE INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION.

(b) The Guarantor irrevocably consents to the service of process of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by certified mail, postage prepaid, to the Guarantor at its address determined pursuant to Section 18 hereof.

(c) Nothing herein shall affect the right of the Agent to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Guarantor in any other jurisdiction.

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(d) The Guarantor hereby waives presentment, notice of dishonor and protests of all instruments included in or evidencing any of the Guaranteed Obligations, and any and all other notices and demands whatsoever (except as expressly provided herein).

Section 21. GOVERNING LAW. THIS GUARANTY, THE SECURITY DOCUMENTS AND THE GUARANTEED OBLIGATIONS SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

Section 22. Captions; Separability.

(a) The captions of the Sections and subsections of this Guaranty have been inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Guaranty.

(b) If any term of this Guaranty shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby.

Section 23. Acknowledgment of Receipt. The Guarantor acknowledges receipt of a copy of this Guaranty and each of the Loan Documents.

Section 24. Entire Agreement. This Guaranty sets forth the entire agreement and understanding of the Agent, the Lenders and the Guarantor with respect to the matters covered hereby and, by accepting this Guaranty, the Guarantor acknowledges that no oral or other understanding, agreements, representations or warranties have been made and/or exist with respect to the matters covered by this Guaranty or with respect to the obligations of the Guarantor hereunder or otherwise, except as specifically set forth in this Guaranty.

Section 25. ACKNOWLEDGMENT OF BENEFITS; CONTRIBUTION; EFFECT OF AVOIDANCE PROVISIONS.

(a) Each Guarantor acknowledges that it has received, or will receive, significant financial and other benefits, either directly or indirectly, from the proceeds of the Loan made by the Lenders to the Borrower pursuant to the Loan Agreement; that the benefits received by such Guarantor are reasonably equivalent consideration for such Guarantor’s execution of this Guaranty; and that such benefits include, without limitation, the access to capital afforded to the Borrower pursuant to the Loan Agreement from which the activities of such Guarantor will be supported. Each Guarantor is executing this Guaranty and the other Loan Documents in consideration of those benefits received by it.

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(b) To the extent that any Guarantor shall, under this Guaranty as a joint and several obligor, pay any of the Guaranteed Obligations (an “Accommodation Payment”), then the Guarantor making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Guarantors in an amount, for each of such other Guarantors, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Guarantor’s Allocable Amount (as hereinafter defined) and the denominator of which is the sum of the Allocable Amounts of all of the Guarantors. As of any date of determination, the “Allocable Amount” of each Guarantor shall be equal to the maximum amount of liability for Accommodation Payments which could be asserted against such Guarantor hereunder which would not otherwise cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the other Lenders under the Loan Documents) to be avoidable or unenforceable against such Guarantor in such proceeding as a result of applicable Laws, including, without limitation, (i) Section 548 of the Bankruptcy Code of the United States and (ii) any state fraudulent transfer or fraudulent conveyance act or statute applied in such proceeding, whether by virtue of Section 544 of the Bankruptcy Code of the United States or otherwise. Each Guarantor hereby agrees as among themselves that, in connection with payments made hereunder, each Guarantor shall have a right of contribution from each other Guarantor in accordance with applicable Laws. Such contribution rights shall be subordinate and subject in right of payment to the Guaranteed Obligations until such time as the Guaranteed Obligations have been irrevocably paid in full, and none of the Guarantors shall exercise any such contribution rights until the Guaranteed Obligations have been irrevocably paid in full.

(c) It is the intent of each Guarantor, the Agent and the Lenders that in any proceeding under any Debtor Relief Laws, such Guarantor’s maximum obligation hereunder shall equal, but not exceed, the maximum amount which would not otherwise cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the other Lenders under the Loan Documents) to be avoidable or unenforceable against such Guarantor in such proceeding as a result of applicable Laws, including, without limitation, (i) Section 548 of the Bankruptcy Code of the United States and (ii) any state fraudulent transfer or fraudulent conveyance act or statute applied in such proceeding, whether by virtue of Section 544 of the Bankruptcy Code of the United States or otherwise. The Laws under which the possible avoidance or unenforceability of the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the other Lenders under the Loan Documents) shall be determined in any such proceeding are referred to herein as “Avoidance Provisions”. Accordingly, to the extent that the obligations of a Guarantor hereunder would otherwise be subject to avoidance under the Avoidance Provisions, the maximum Guaranteed Obligations for which such Guarantor shall be liable hereunder shall be reduced to the greater of

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(A) the amount which, as of the time any of the Guaranteed Obligations are deemed to have been incurred by such Guarantor under the Avoidance Provisions, would not cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the other Lenders under the Loan Documents), to be subject to avoidance under the Avoidance Provisions or (B) the amount which, as of the time demand is made hereunder upon such Guarantor for payment on account of the Guaranteed Obligations, would not cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the Lender under the Loan Documents), to be subject to avoidance under the Avoidance Provisions. The provisions under this Section are intended solely to preserve the rights of the Agent and the Lenders hereunder to the maximum extent that would not cause the obligations of any Guarantor hereunder to be subject to avoidance under the Avoidance Provisions, and no Guarantor or any other Person shall have any right or claim under this Section as against the Agent and the Lenders that would not otherwise be available to such Person under the Avoidance Provisions.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Guarantors have duly executed or caused this Guaranty to be duly executed in The Commonwealth of Massachusetts as of the date first above set forth.

GUARANTORS: WINTHROP REALTY TRUST, an Ohio Business trust
By:
	Name:	Carolyn Tiffany
	Title:	President
WRT TRS MANAGEMENT CORP., a Delaware corporation
By:
	Name:	Carolyn Tiffany
	Title:	President
FT-FIN ACQUISITION LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
FT-FIN GP LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Guaranty Signature Page

WRT-ANDOVER PROPERTY LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
WRT-ANDOVER PROPERTY MANAGER LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
WRT-SOUTH BURLINGTON PROPERTY LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
WRT-SOUTH BURLINGTON PROPERTY MANAGER LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
WRT PROPERTY HOLDING LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

Guaranty Signature Page

WRT-CROSSROADS LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
WRT-CROSSROADS ONE LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
FT-WD PROPERTY LLC, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
FT-KRG (Atlanta) LLC FT-KRG (Denton) LLC FT-KRG (Louisville) LLC FT-KRG (Memphis) LLC FT-KRG (Seabrook) LLC FT-KRG (Greensboro) LLC
Each, a Delaware limited liability company
By:
	Name:	Carolyn Tiffany
	Title:	President
FT-KRG PROPERTY L.P., a Delaware limited partnership
By:	FT-FIN GP LLC, a Delaware limited
	liability company, its general partner

By:
	Name:	Carolyn Tiffany
	Title:	President

Guaranty Signature Page

EX-21

Exhibit 21

Name of Entity	State of Formation
1051 Perimeter Drive Property LLC	Delaware
180 North Wacker Property LLC	Delaware
29 East Madison Property LLC	Delaware
5400 Westheimer Court LLC	Delaware
5400 Westheimer Holding L.P.	Delaware
5400 Westheimer Limited Partnership	Delaware
CDH CDO LLC	Delaware
FT-5400 New Unit Lender LLC	Delaware
FT-5400 Westheimer LLC	Delaware
FT-Amherst Property LLC	Delaware
FT-Amherst Property Manager LLC	Delaware
FT-Churchill Property L.P.	Delaware
FT-Circle Tower LLC	Delaware
FT-Circle Tower Manager LLC	Delaware
FT-FIN Acquisition LLC	Delaware
FT-FIN GP LLC	Delaware
FT-Florida Property LLC	Delaware
FT-Florida Property Manager LLC	Delaware
FT-KRG (Athens) LLC	Delaware
FT-KRG (Atlanta) LLC	Delaware
FT-KRG (Denton) LLC	Delaware
FT-KRG (Greensboro) LLC	Delaware
FT-KRG (Knoxville) LLC	Delaware
FT-KRG (Lafayette) LLC	Delaware
FT-KRG (Louisville) LLC	Delaware
FT-KRG (Memphis) LLC	Delaware
FT-KRG (Seabrook) LLC	Delaware
FT-KRG (Sherman) LLC	Delaware
FT-KRG (St. Louis) LLC	Delaware
FT-KRG Property L.P.	Delaware
FT-Marc Class B LLC	Delaware
FT-Marc Loan LLC	Delaware
FT-Ontario Holdings LLC	Delaware
FT-Ontario Parking LLC	Delaware
FT-Ontario Parking Manager LLC	Delaware
FT-Ontario Property LLC	Delaware
FT-Ontario Property Manager LLC	Delaware
FT-Orlando Property LLC	Delaware
FT-Orlando Property Manager LLC	Delaware
FT-WD Property LLC	Delaware
Lex-Win Acquisition LLC	Delaware
Newbury Apartments LLC	Delaware
NY 46th Street Lender LLC	Delaware
WRT-46th Street Gotham LLC	Delaware
WRT-1050 Corporetum Holdings LLC	Delaware

Name of Entity	State of Formation
WRT-1050 Corporetum Property LLC	Delaware
WRT-1050 Corporetum Property Manager LLC	Delaware
WRT-550/650 Corporetum Property LLC	Delaware
WRT-550/650 Corporetum Property Manager LLC	Delaware
WRT-701 Arboretum Property LLC	Delaware
WRT-701 Arboretum Property Manager LLC	Delaware
WRT-Andover Property LLC	Delaware
WRT-Andover Property Manager LLC	Delaware
WRT-Atlanta LLC	Delaware
WRT-CDH II LLC	Delaware
WRT-Concord LLC	Delaware
WRT-Crossroads LLC	Delaware
WRT-Crossroads One LLC	Delaware
WRT-DV LLC	Delaware
WRT-Lender LLC	Delaware
WRT-Marc 180 North Wacker LLC	Delaware
WRT-Marc RC Holding LLC	Delaware
WRT-Marc RC Land LLC	Illinois
WRT-Marc RC LLC	Illinois
WRT-Moffett LLC	Delaware
WRT-MT LLC	Delaware
WRT-Nashville Airpark LLC	Delaware
WRT-Plantation Property Owner LLC	Delaware
WRT-Property Holdings LLC	Delaware
WRT Realty L.P.	Delaware
WRT-Rockwell LLC	Delaware
WRT-ROIC Riverside LLC	Delaware
WRT-Science Center Property Owner LLC	Delaware
WRT-Science Center Property Manager LLC	Delaware
WRT-SD Driver LLC	Delaware
WRT-South Burlington Property LLC	Delaware
WRT-South Burlington Property Manager LLC	Delaware
WRT-Springing Member LLC	Delaware
WRT-TALF LLC	Delaware
WRT TRS Management Corp.	Delaware
WRT-VHH LLC	Delaware
WRT-Vision Creekwood LLC	Delaware
WRT-Vision Holdings LLC	Delaware
WRT-Vision LLC	Delaware
WRT-Vision Loan LLC	Delaware
WRT-Vision Management LLC	Delaware
WRT-Westwood Noteholder LLC	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-163157 and 333-125987), Form S-3/A (No. 333-155761) and Form S-3D (No. 333-161664) of Winthrop Realty Trust and subsidiaries of our report dated March 16, 2011, relating to the consolidated financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 16, 2011

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos 333-163157 and 333-125987), Form S-3/A (No. 333-155761) and Form S-3D (No. 333-161664) of Winthrop Realty Trust and subsidiaries of our report dated February 19, 2010, relating to the financial statements of Lex-Win Concord LLC, which includes an explanatory paragraph relating to Lex-Win Concord LLC’s ability to continue as a going concern as described in Note 2 to the consolidated financial statements which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 16, 2011

EX-24

Exhibit 24

WINTHROP REALTY TRUST (FORMERLY KNOWN AS FIRST UNION
REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS)

ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2010

Power of Attorney — Trustees

Each of the undersigned, a Trustee of Winthrop Realty Trust (formerly known as First Union Real Estate Equity and Mortgage Investments), an Ohio business trust (the “Trust”), which anticipates filing with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, an Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “Form 10-K”), does hereby constitute and appoint Carolyn Tiffany, with full power of substitution and resubstitution, as attorney to sign for him and in his name the Form 10-K and any and all amendments and exhibits thereto, and any and all other documents to be filed with the Securities and Exchange Commission pertaining to the Form 10-K, with full power and authority to do and perform any and all acts and things whatsoever required or necessary to be done in the premises, as fully to all intents and purposes as he could do if personally present, hereby ratifying and approving the acts of said attorney and any such substitute.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand this 1^st day of March, 2011.

/s/ Arthur Blasberg, Jr. Arthur Blasberg, Jr.

/s/ Howard Goldberg Howard Goldberg

/s/ Thomas McWilliams Thomas McWilliams

/s/ Lee Seidler Lee Seidler

/s/ Steven Zalkind Steven Zalkind

EX-31

Exhibit 31.1

WINTHROP REALTY TRUST
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2010

CERTIFICATIONS

I, Michael L. Ashner, certify that:

1. I have reviewed this Annual Report on Form 10-K of Winthrop Realty Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2011	/s/ Michael L. Ashner
	Michael L. Ashner
	Chief Executive Officer

Exhibit 31.2

WINTHROP REALTY TRUST
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2010

CERTIFICATIONS

I, Thomas C. Staples, certify that:

1. I have reviewed this Annual Report on Form 10-K of Winthrop Realty Trust;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2011	/s/ Thomas C. Staples
	Thomas C. Staples
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Winthrop Realty Trust (formerly known as First Union Real Estate Equity and Mortgage Investments (the “Company”) on Form 10-K for the annual period ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 16, 2011	/s/ Michael L. Ashner
	Michael L. Ashner
	Chief Executive Officer
Date: March 16, 2011	/s/ Thomas C. Staples
	Thomas C. Staples
	Chief Financial Officer

EX-99.1

Exhibit 99.1

Lex-Win Concord LLC

Consolidated Financial Statements

For the Period from January 1, 2010 to August 26, 2010 (Dissolution),
and the Years Ended December 31, 2009 and December 31, 2008

LEX-WIN CONCORD LLC

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	1
Consolidated Balance Sheet at December 31, 2009	2
Consolidated Statements of Operations for the Period from January 1, 2010 to August 26, 2010 (Dissolution) (Unaudited) and the Years Ended December 31, 2009 and 2008	3
Consolidated Statements of Comprehensive Loss for the Period from January 1, 2010 to August 26, 2010(Dissolution) (Unaudited) and the Years Ended December 31, 2009 and 2008	4
Consolidated Statements of Changes in Members’ Capital for the Period from January 1, 2010 to August 26, 2010 (Dissolution) (Unaudited) and the Years Ended December 31, 2009 and 2008	5
Consolidated Statements of Cash Flows for the Period from January 1, 2010 to August 26, 2010 (Dissolution) (Unaudited) and the Years Ended December 31, 2009 and 2008	7
Notes to Consolidated Financial Statements	9

Report of Independent Registered Public Accounting Firm

To the Members of Lex-Win Concord LLC:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, changes in members’ capital and cash flows present fairly, in all material respects, the financial position of Lex-Win Concord LLC and its subsidiaries at December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 4 to the consolidated financial statements, the Company changed the manner in which it accounts for non-controlling interests and other-than-temporary impairment of available for sale securities in 2009.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the financial statements, the Company has suffered losses from operations and is in violation of certain debt covenants that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 19, 2010

1

LEX-WIN CONCORD LLC

CONSOLIDATED BALANCE SHEET

(In thousands)

	December 31,
	2009
Assets:
Cash and cash equivalents	$	747
Restricted cash		25,369
Real estate debt investments, net of allowance for loss		447,270
Real estate debt investments held for sale, at fair value		66,311
Available for sale securities, net		83,977
Interest and other receivables		1,756
Deferred financing costs, net of accumulated amortization		5,306
Real estate properties held for sale		3,634
Other assets		138
Total assets	$	634,508
Liabilities and Members’ Capital:
Liabilities:
Repurchase agreements	$	135,064
Revolving credit facility		58,850
Collateralized debt obligations		347,525
Collateral support obligation		9,757
Sub-participation obligation		4,500
Liabilities of discontinued operations		142
Other liabilities		14,056
Note payable to related parties		—
Total liabilities		569,894
Non-controlling redeemable preferred interest:
Non-controlling redeemable preferred interest		5,720
Total non-controlling redeemable preferred interest		5,720
Members’ Capital:
Lex-Win Concord LLC members’ capital		113,928
Accumulated other comprehensive loss		(55,148	)
Total Lex-Win Concord LLC members’ capital		58,780
Non-controlling equity interest		114
Total members’ capital		58,894
Total liabilities and members’ capital	$	634,508

The accompanying notes are an integral part of these consolidated financial statements.

2

LEX-WIN CONCORD LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Period from January 1, 2010 to August 26, 2010 (Dissolution) and the

Years Ended December 31, 2009 and 2008

(In thousands)

	(Unaudited)
	2010			2009			2008
Income:
Interest income on real estate debt investments and available for sale securities	$	17,930		$	38,948		$	71,307
Realized gain on sale of real estate debt investments		7,760			—			—
Total income		25,690			38,948			71,307
Expenses:
Interest		9,581			17,335			36,410
Provision for loss on real estate debt investments		106,150			80,620			31,053
Realized loss on sale of real estate debt investments		2,407			9,606			—
Impairment loss on real estate debt investments held for sale		—			101,027			—
Realized loss on sale of real estate debt investments held for sale		—			17,566			—
Other-than-temporary impairment losses on available-for-sale securities
Gross impairment losses		3,874			29,770			65,905
Less: Impairments recognized in other comprehensive losses		—			(13,468	)		7,927
Net impairment losses recognized in earnings		3,874			16,302			73,832
Realized loss on sale of available for sale securities		—			5,074			—
Fees and expenses paid to related party		470			1,108			1,637
Collateral support expense		319			9,757			—
General and administrative		1,754			4,604			3,187
Total expenses		124,555			262,999			146,119
Other income:
Interest income on bank deposits		6			7			426
Gain on extinguishment of debt		—			—			15,603
Total other income		6			7			16,029
Loss from continuing operations		(98,859	)		(224,044	)		(58,783	)
Discontinued operations:
Loss from discontinued operations		(971	)		(959	)		—
Total discontinued operations		(971	)		(959	)		—
Consolidated net loss		(99,830	)		(225,003	)		(58,783	)
(Income) loss attributable to the non-controlling redeemable preferred interest		4,585			68,709			(1,619	)
Income attributable to the non-controlling interest		(8	)		(12	)		(12	)
Net loss attributable to Lex-Win Concord LLC	$	(95,253	)	$	(156,306	)	$	(60,414	)

The accompanying notes are an integral part of these consolidated financial statements.

3

LEX-WIN CONCORD LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
For the Period from January 1, 2010 to August 26, 2010 (Dissolution) and the
Years Ended December 31, 2009 and 2008

(In thousands)

	(Unaudited)
	2010			2009			2008
Consolidated net loss	$	(99,830	)	$	(225,003	)	$	(58,783	)
Other comprehensive income (loss):
Unrealized gain (loss) on cash flow hedges		(4,486	)		10,668			(20,200	)
Unrealized gain (loss) on available for sale securities		5,774			(29,770	)		(65,905	)
Reclassification of unrealized loss to impairment loss		—			16,302			73,832
Other comprehensive loss		1,288			(2,800	)		(12,273	)
Comprehensive loss		(98,542	)		(227,803	)		(71,056	)
Comprehensive income attributable to non-controlling interest		(8	)		(12	)		(12	)
Comprehensive (income) loss attributable to non-controlling redeemable preferred interest		4,585			68,709			(1,619	)
Comprehensive loss attributable to Lex-Win Concord LLC	$	(93,965	)	$	(159,106	)	$	(72,687	)

The accompanying notes are an integral part of these consolidated financial statements.

4

LEX-WIN CONCORD LLC

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL
For the Period from January 1, 2010 to August 26, 2010 (Dissolution) and the
Years Ended December 31, 2009 and 2008

(In thousands)

							Accumulated
							Other			Non-
							Comprehensive			Controlling
	Winthrop			Lexington			Income (Loss)			Interest			Total
Balance at December 31, 2007	$	163,851		$	163,851		$	(16,781	)	$	102			311,023
Contributions from Members		5,087			5,087			—			—			10,174
Distributions to Members		(14,600	)		(14,600	)		—			—			(29,200	)
Net income allocated to non-controlling interests		—			—			—			12			12
Distributions to non- controlling interests		—			—			—			—			—
Unrealized loss on cash flow hedges		—			—			(20,200	)		—			(20,200	)
Unrealized gain on available for sale securities		—			—			7,927			—			7,927
Net income allocation		(30,207	)		(30,207	)		—			—			(60,414	)
Balance at December 31, 2008		124,131			124,131			(29,054	)		114			219,322
Adjustment to opening balance for cumulative effect of adopting new accounting method		11,647			11,647			(23,294	)		—			—
Net income allocated to non-controlling interests		—			—			—			12			12
Contributions from Members		118			118			—			—			236
Distributions to Members		(779	)		(779	)		—			—			(1,558	)
Distributions to non- controlling interests		—			—			—			(12	)		(12	)
Unrealized gain on cash flow hedges		—			—			10,668			—			10,668
Unrealized loss on available for sale securities		—			—			(13,468	)		—			(13,468	)
Net loss allocation		(78,153	)		(78,153	)		—			—			(156,306	)
Balance, December 31, 2009		56,964			56,964			(55,148	)		114			58,894

The accompanying notes are an integral part of these consolidated financial statements.

5

LEX-WIN CONCORD LLC

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL
For the Period from January 1, 2010 to August 26, 2010 (Dissolution) and the
Years Ended December 31, 2009 and 2008

(In thousands, Continued)

							Accumulated
							Other			Non-
							Comprehensive			Controlling
(Unaudited)	Winthrop			Lexington			Income (Loss)			Interest			Total
Balance at December 31, 2009		56,964			56,964			(55,148	)		114			58,894
Net income allocated to non-controlling interests		—			—			—			8			8
Distributions to non- controlling interests		—			—			—			(12	)		(12	)
Unrealized loss on cash flow hedges		—			—			(4,486	)		—			(4,486	)
Unrealized gain on available for sale securities		—			—			5,774			—			5,774
Net loss allocation		(47,627	)		(47,626	)		—			—			(95,253	)
Dissolution adjustment		(9,337	)		(9,338	)		53,860			(110	)		35,075
Balance, August 26, 2010	$	—		$	—		$	—		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

6

LEX-WIN CONCORD LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Period from January 1, 2010 to August 26, 2010 (Dissolution) and the

Years Ended December 31, 2009 and 2008

(In thousands)

	(Unaudited)
	2010			2009			2008
Cash flows from operating activities:
Consolidated net income (loss)	$	(99,830	)	$	(225,003	)	$	(58,783	)
Adjustments to reconcile net income (loss) to cash provided by operating activities
Amortization and accretion of interest		(1,270	)		(4,866	)		(7,686	)
Amortization of deferred financing costs		1,634			1,945			1,469
Impairment loss on available for sale securities		3,874			16,302			73,832
Provision for loss on real estate debt investments		106,150			80,620			31,053
Impairment loss on real estate debt investments held for sale		—			101,027			—
Realized loss on sale of real estate debt investments		1,187			9,606			—
Realized loss on sale of real estate debt investments held for sale		1,220			17,566			—
Realized loss on sale of available for sale securities		—			5,074			—
Realized loss on sale of real estate properties held for sale		708			—			—
Realized gain on sale of investments held for sale		(2,130	)		—			—
Realized gain on available for sale securities		(1,323	)		—			—
Realized gain on sale of real estate debt investments		(4,307	)		—			—
Gain on extinguishment of debt		—			—			(15,603	)
Changes in operating assets and liabilities:
Interest and other receivables		250			1,842			1,579
Other assets		104			(36	)		455
Other liabilities		(527	)		(904	)		442
Liabilities of discontinued operations		(90	)		142			—
Collateral support obligation		319			9,757			—
Net cash provided by operating activities		5,969			13,072			26,758
Cash flows from investing activities:
Proceeds from sale of real estate debt investments		9,888			18,817			—
Proceeds from sale of real estate debt investments held for sale		70,038			86,481			—
Proceeds from sale of available for sale securities		2,868			3,670			—
Proceeds from sale of real estate properties held for sale — discontinued operations		—			6,721			—
Purchase of real estate debt investments		—			—			(14,534	)
Funding of commitments on real estate debt investments		—			(1,714	)		—
Real estate debt investments repaid		—			30,168			78,496
Available for sale securities purchased		(13,562	)		(6,856	)		—
Real estate debt investments purchased		(3,000	)
Available for sale securities repaid		296			3,935			5,296
Change in restricted cash		13,112			(22,550	)		2,770
Net cash provided by investing activities		79,640			118,672			72,028

The accompanying notes are an integral part of these consolidated financial statements.

7

LEX-WIN CONCORD LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period from January 1, 2010 to August 26, 2010 (Dissolution) and the
Years Ended December 31, 2009 and 2008

(In thousands)

	(Unaudited)
	2010			2009			2008
Cash flows from financing activities:
Proceeds from related party notes payable	$	—		$	8,360		$	20,000
Repayment of related party notes payable		—			(18,360	)		(10,000	)
Repayments on repurchase agreements		(71,627	)		(105,540	)		(231,720	)
Proceeds from revolving line of credit facility		—			—			80,000
Repayment of revolving credit facility		(20,801	)		(21,150	)		—
Payment to terminate derivative contract		—			(8,221	)		—
Payment on collateralized debt obligation		—			—			(13,111	)
Proceeds from sub-participation arrangement		—			4,500			—
Payment of deferred financing costs		—			(87	)		(1,401	)
Distributions to non-controlling redeemable preferred interest		—			(3,152	)		—
Distributions to non-controlling interests		(12	)		(12	)		(1,178	)
Distribution to members		—			(1,240	)		(29,200	)
Distribution to members upon liquidation		(3,416	)		—			—
Contributions from non-controlling redeemable preferred interest		9,500			1,354			76,000
Contributions from members		—			236			10,174
Net cash used in financing activities		(86,356	)		(143,312	)		(100,436	)
Net decrease in cash and cash equivalents		(747	)		(11,568	)		(1,650	)
Cash and cash equivalents at beginning of period		747			12,315			13,965
Cash and cash equivalents at end of period	$	—		$	747		$	12,315
Supplemental cash flow information:
Interest paid	$	7,881		$	16,505		$	33,798
Collateral support arrangement	$	—		$	—		$	231
Non-cash investing activity:
Investment in real estate debt investment by issuance of first mortgage seller financing on real estate property sold	$	—		$	955		$	—
Non-cash financing activities:
Distribution of available for sale security to members	$	—		$	318		$	—
Distribution of available for sale security to non-controlling redeemable preferred interest	$	—		$	214		$	—
Accrued dividend payable to non-controlling interest	$	8		$	12		$	12
Accrued dividend payable to non-controlling redeemable preferred interest	$	—		$	5,720		$	441
Adjustment of Assets and Liabilites upon Dissolution
Resricted cash	$	(12,257	)	$	—		$	—
Real estate debt investments, net of allowance	$	(338,008	)	$	—		$	—
Available for sale securities	$	(98,217	)	$	—		$	—
Interest and other receivables	$	(1,506	)	$	—		$	—
Deferred and other assets	$	(4,788	)	$	—		$	—
Repurchase agreements	$	63,437		$	—		$	—
Revolving credit facility	$	38,049		$	—		$	—
Collaterlized debt obligations	$	347,525		$	—		$	—
Collateral support obligation	$	10,076		$	—		$	—
Sub-participation obligation	$	17,762		$	—		$	—
Deferred items and other liabilities	$	5,783		$	—		$	—
Non-controlling redeemable preferred interest	$	110		$	—		$	—
Non-controlling equity interest	$	10,635		$	—		$	—
Members’ capital	$	(35,185	)	$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

8

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 1 — Description of Business and Dissolution

Lex-Win Concord LLC (the “Company” and “Lex-Win”) was created on August 2, 2008. Prior to the Company’s formation, its subsidiary Concord Debt Holdings LLC (“Concord”), a Delaware limited liability company, was formed on March 31, 2006 to acquire real estate whole loans and subordinate real estate debt investments such as B-notes, mezzanine loans and preferred equity, and commercial real estate securities including commercial mortgage backed securities, collateralized debt obligations and real estate mortgage investment conduits. Concord upon its formation was owned 50% each by Winthrop Realty Trust (“Winthrop”) and Lexington Realty Trust (“Lexington”), collectively the Members. In connection with the formation of Concord, Lexington contributed existing real estate debt investments and other assets totaling $54,279,000 and repurchase agreements and other liabilities of $32,251,000, which had been acquired in anticipation of the formation of the venture. Concurrently with the formation of Concord, Winthrop contributed $10,864,000 in exchange for 50% of the net equity of Concord.

Concord Debt Funding Trust is a majority owned subsidiary of the Company through its investment in Concord and was formed November 3, 2006. Concord Debt Funding Trust issued 100,000 common shares and 102 shares of 12% cumulative redeemable preferred shares and Concord owns 100% of the common shares while the preferred shares are owned by individuals associated with Winthrop and Lexington.

In connection with the formation of the Company, both Winthrop and Lexington contributed their 50% interests in Concord and WRP Management LLC (“WRP Management”), the entity that provided management services to Concord Real Estate CDO 2006-1, Ltd (“CDO-1”and “the Issuer”), and a wholly-owned subsidiary of Concord. WRP Management contracted with WRP Sub-Management LLC (“WRP Sub Management”) to act as Administrative Manager to the Company. The Second Amended and Restated Limited Liability Company Joint Venture Agreement (the “Joint Venture Agreement”) of Concord was amended and restated reflect this change in legal structure and to admit Inland America Concord Sub LLC (“Inland”) with a redeemable preferred membership interest in Concord. Inland committed to invest up to $100,000,000 in Concord over a 12-18 month investment period subject to certain conditions. The Company will hold 100% of the common membership interests in Concord and will serve as its managing member.

On May 22, 2009, a wholly-owned subsidiary of Inland filed a legal action against the Company and Concord generally seeking declaratory relief that Inland should not be required to satisfy the May 11, 2009 capital call made by Concord in the amount of $24,000,000 and that Inland is entitled to a priority return of its capital. The Company filed counterclaims against Inland which state, in general, that Inland is in material breach of their agreements with the Company and seeking to recover all losses incurred by it as a result of such breach.

On August 26, 2010 the Company finalized a settlement agreement to resolve the action which would provide for, among other things, no obligation on any of the parties to make additional capital contributions to Concord, the allocation of distributions equally among Inland, Lexington, and Winthrop and the formation of a new entity to be owned by subsidiaries of Inland, Lexington and Winthrop named CDH CDO LLC which purchased 100% of the stock of CDO-1 from Concord.

The settlement agreement triggered simultaneous transactions that effectively changed the organization structure, economics and governance of Concord such that Lex-Win was dissolved and transferred 100% of its interest in Concord to its members, Winthrop and Lexington. As a result of the concurrent transfer of the Company’s equity interests in Concord to Winthrop and Lexington and its dissolution on August 26, 2010, no balance sheet is presented as of August 26, 2010, the date of the Company’s dissolution.

9

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 2 — Going Concern Considerations

The conditions that existed as of December 31, 2009, as described below are indicative of the entity’s potential inability to continue as a going concern. The financial information included in this report does not include any adjustments that might result from the outcome of this uncertainty.

The real estate markets have been significantly impacted by the continued deterioration of the global credit markets and other macro economic factors. As a result of these and other factors including increased margin calls on Concord’s repurchase agreements, the Company has experienced further declines in values during the year ended December 31, 2009 to its real estate debt investments and available for sale securities. This has generated significant impairment charges and difficulty in executing sales of select investments pursuant to certain repurchase agreements. The initial strategy to issue CDOs and the availability of new financing has effectively been eliminated, making the execution of the Company’s initial strategy unachievable.

Accordingly, the Company is unable to satisfy certain of its financial covenants under its loan documents for which it has not yet received waivers and is in technical default under these loans. In addition the Company has near-term repayment obligations under its repurchase agreements. The Company is working with the lenders, but there can be no assurance that the lenders will grant long-term forbearance and could exercise their remedies at any time.

In addition, a continued decline in the operating performance of the underlying collateral of certain of the Company’s available for sale securities and real estate loans may result in borrowers’ inability to meet its debt service coverage, which could result in additional impairments of loan assets. Such defaults could significantly reduce the cash flow available to the Company for its obligations and also necessitate additional asset sales at disadvantageous terms.

In response to the declining real estate and capital markets the Company may be unable to consummate certain activities that would improve the Company’s financial flexibility such as the sale of encumbered assets for fair value.

Note 3 — Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, and its subsidiaries, which are either majority owned or controlled by the Company. The Company identifies entities for which control is achieved through means other than through voting rights (a “variable interest entity” or “VIE”) and determines when and which business enterprise, if any, should consolidate the VIE. In addition, the Company discloses information pertaining to such entities wherein the Company is the primary beneficiary or other entities wherein the Company has a significant variable interest. All significant intercompany transactions and balances have been eliminated.

Out of Period Adjustment

During 2009, the Company determined that there was an error in the recognition of fees paid to the party which originated certain loans purchased by the Company which is recorded as a reduction of interest income. The Company determined that interest income was overstated by approximately $594,000 for the year ended December 31, 2008. The Company has recorded an adjustment to correct this error in 2009 and determined that adjustment does not materially affect the financial statements for any of the years presented.

10

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 3 — Summary of Significant Accounting Policies (Continued)

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates in the consolidated financial statements include the valuation of the Company’s real estate debt investments and available for sale securities and estimates pertaining to credit. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The Company places its cash and cash equivalents in major financial institutions.

Concentration of Credit Risk

The Company maintains cash deposits and restricted cash deposits with major financial institutions, which from time to time may exceed federally insured limits. The Company believes it mitigates its risk of loss by maintaining its cash deposits with major financial institutions. To date, the Company has not experienced any losses of its cash deposits. Real estate debt investments and available for sale securities can potentially subject the Company to concentrations of credit risk. Management of the Company performs ongoing credit evaluations of borrowers and valuations of the real property and interests that collateralize the Company’s investments.

Within its real estate debt investment portfolio, the Company holds 11 impaired loans with related loan loss allowances at December 31, 2009, six of which are non-performing loans that subject the Company to a concentration of credit risk. See Note 7.

Restricted Cash

The Company had restricted cash of $25,369,000 at December 31, 2009 which included $20,726,000 in proceeds from the repayment of principal of real estate debt investments that the Company is required to reinvest under the terms of its CDO indenture. The remaining balance of $4,643,000 at December 31, 2009 represents funding of future lending commitments for certain real estate debt investments as well as amounts held in escrow accounts as collateral.

Real Estate Debt Investments

The majority of real estate debt investments are considered to be held for investment. Such investments are recorded at cost. Discounts and premiums on purchased assets are amortized over the life of the investment using the effective interest method. The amortization is reflected as an adjustment to interest income. Other costs incurred in connection with acquiring loans, such as marketing and administrative costs, are charged to expense as incurred.

Real Estate Debt Investment Impairment

The Company considers a real estate debt investment (“loan”) impaired when, based upon current information and events, it is probable that it will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. The Company believes its loans are collateral dependent and, accordingly, it generally utilizes the fair value of the loan collateral when assessing its loans for impairment. If the fair value of the collateral is equal to or greater than the recorded investment in the loan, no impairment is recognized. Specific valuation allowances are established for impaired loans based on the fair value of

11

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 3 — Summary of Significant Accounting Policies (Continued)

collateral on an individual loan basis. The fair value of the collateral is determined by selecting the most appropriate valuation methodology. These methodologies include the evaluation of operating cash flow from the collateral during the projected holding period, and the estimated sales value of the collateral computed by applying an expected capitalization rate to the stabilized net operating income of the specific property, discounted at market discount rates. If upon completion of the valuation, the fair value of the underlying real estate collateralizing the impaired loan is less than the net carrying value of the loan, a specific loan allowance is created with a corresponding charge to the provision for loan losses. The allowance for each loan is maintained at a level deemed adequate by management to absorb potential losses.

In addition, a formula specific loss allowance may be established to cover performing loans when (i) available information indicates that it is probable a loss has occurred in the portfolio and (ii) the amount of the loss can be reasonably estimated in accordance with FASB guidance on loss contingencies. Required loss allowance balances for the performing loan portfolio are derived from probabilities of default and loss severity estimates assigned to each loan as part of the Company’s quarterly internal risk rating assessment. Probabilities of principal loss and severity factors are based on industry and/or internal experience and may be adjusted for significant factors that, based on management’s judgment, impact the collectability of the loans.

Income Recognition for Impaired Real Estate Debt Investments

The Company recognizes interest income on impaired, non-performing real estate debt investments using the cash-basis method.

Real Estate Debt Investments Held for Sale

The Company reports real estate debt investments held for sale at the lower of cost or fair value.

Available for Sale Securities

The Company evaluates its portfolio of available for sale securities for other-than-temporary impairment by conducting and documenting periodic reviews of all securities with unrealized losses to evaluate whether the impairment is other than temporary. Any credit-related impairment on debt securities the Company does not plan to sell and is not more-likely-than-not to be required to sell is recognized in the Consolidated Statement of Operations, with the non-credit-related impairment recognized in other comprehensive loss. For other impaired debt securities, the entire impairment is recognized in the Consolidated Statement of Operations.

The Company recognizes interest income on its portfolio of available for sale securities by estimating the excess of all cash flows attributable to the security estimated at the measurement date over the Company’s initial investment in the security using the effective yield method. Discounts attributable to previously recognized other-than-temporary impairment charges are recognized in interest income on the effective interest method based upon the excess of all estimated prospective cash flows over the investment balance in the loan security at the measurement date. The Company will accrete certain impairment discounts over the remaining life of the securities using the effective interest method.

During the period from January 1, 2010 to August 26, 2010 and the years ended December 31, 2009 and 2008, the Company recognized in interest income accretion of discounts totaling $637,000, $1,071,000 and $1,215,000 respectively.

Deferred Financing Costs

Fees and costs incurred to obtain long-term financing have been deferred and are being amortized over the terms of the related financing, on a basis which approximates the effective interest method.

12

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 3 — Summary of Significant Accounting Policies (Continued)

Real Estate Properties Held For Sale — Discontinued Operations

Real estate properties held for sale are comprised of real property collateralizing certain loans that was acquired by foreclosure. Real estate that is acquired by foreclosure and held for sale is recorded at the lower of its carrying amount or fair value less cost to sell and is not depreciated.

Impairment charges, when applicable, are recorded as a valuation allowance with a loss from foreclosed assets held for sale recognized in the income statement. Any expenditure that significantly improves the estimated fair value of the assets may be capitalized.

Non-Controlling Interests

Effective January 1, 2009, the Company adopted new FASB provisions on non-controlling interests (previously known as “minority interests”). The adoption of this new accounting standard resulted in (i) the reclassification of minority interests in consolidated subsidiaries to non-controlling interests in consolidated subsidiaries, a component of permanent equity on the Company’s Consolidated Balance Sheet, (ii) the reclassification of minority interest expense to net income attributable to non-controlling interests on the Company’s consolidated statements of operations and comprehensive income, and (iii) additional disclosures, including consolidated statements of changes in members’ capital. The implementation of this standard had no effect on the Company’s results of operations. However on the Consolidated Balance Sheet as a result of the adoption, the Company reclassified certain non-controlling interests to permanent equity from the mezzanine section which totaled approximately $114,000 as of December 31, 2009. The remaining non-controlling interests related to redeemable preferred interests which continue to be classified in the mezzanine section was $5,720,000 as of December 31, 2009.

Allocations of members’ capital and the non-controlling redeemable preferred interest are determined in accordance with the governing documents of Concord. At each reporting period, Concord performs a hypothetical liquidation of the members’ capital and non-controlling redeemable preferred interests as a basis for these allocations. As a result of this analysis, the Company was allocated net losses from operations for the period from January 1, 2010 to August 26, 2010 and the year ended December 31, 2009 of $95,253,000 and $156,306,000 and net losses of $68,709,000 were allocated to the non-controlling redeemable preferred interest. The unpaid accrued preferred return was $5,720,000 at December 31, 2009.

As of December 31, 2009, Concord did not distribute $5,720,000 of the total $8,427,000 accrued priority interest payable to satisfy the 10% preferred return on Inland’s invested capital and was not in compliance with the Total Debt Limit as defined in Concord’s operating agreement. As a result, Concord is required to accrue and distribute to Inland its priority return at a rate of 13% per annum until such time as Concord is able to comply with these covenants.

Members’ Capital

Capital contributions, distributions and profits and losses are allocated in accordance with the terms of the Joint Venture Agreement.

Other Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income, as presented in the consolidated statements of operations, adjusted for changes in unrealized gains or losses on debt securities available for sale and changes in the fair value of derivative financial instruments accounted for as cash flow hedges.

13

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 3 — Summary of Significant Accounting Policies (Continued)

Income Taxes

Concord Debt Funding Trust is organized and conducts its operations to qualify as a real estate investment trust and to comply with the provisions of the Internal Revenue Code with respect thereto. A real estate investment trust is generally not subject to federal income tax on the portion of its REIT taxable income (“Taxable Income”), which is distributed to its stockholders, provided that at least 90% of Taxable Income is distributed and certain other requirements are met.

Income taxes are not considered in the accompanying consolidated financial statements since the Company is not a taxable entity. Taxes on income, as applicable, are the responsibility of the individual Members; accordingly, no provision for federal or state income taxes has been recorded.

The Company reviews its tax positions under accounting guidance which requires that a tax position may only be recognized in the financial statements if it is more likely than not that the tax position will prevail if challenged by tax authorities. The Company believes it is more likely than not that our tax positions will be sustained in any tax examination. We have no income tax expense, deferred tax assets or deferred tax liabilities associated with any such uncertain tax positions for the operations of any entity included in the consolidated results of operations.

Derivatives and Hedging Activities

The Company measures its designated and qualifying derivative instruments at fair value and records them in the Consolidated Balance Sheets as an asset or liability, depending on the Company’s rights or obligations under the applicable derivative contract. Fair value adjustments will be recorded in accumulated other comprehensive income or earnings in the current period based on whether the derivative financial instrument is designated and qualifies as a hedging instrument. The effective portions of changes in fair value of designated and qualifying instruments are reported in other comprehensive income and are subsequently reclassified into earnings when the hedged item affects earnings.

The changes in fair value of derivative instruments which are not designated as hedging instruments and the ineffective portions of hedges are recorded in earnings for the current period.

The Company utilizes derivative financial instruments to reduce exposure to fluctuations in interest rates. The Company has not entered, and does not plan to enter, into financial instruments for trading or speculative purposes. Additionally, the Company has a policy of only entering into derivative contracts with major financial institutions. The principal financial instruments used by the Company are interest rate swaps.

Note 4- Changes in Accounting Principles

Other-than-temporary impairments

On April 1, 2009, the Company adopted newly issued accounting guidance that amended the existing accounting model for evaluating whether declines in the fair value of debt securities are other-than-temporary in nature. Previously, declines in the fair value of a debt security were generally considered to be other-than-temporary in nature unless the investor could positively assert that it had the intent and ability to hold the security long enough to recover its amortized cost basis. The guidance requires that an investor recognize other-than-temporary impairment for (a) those securities that the investor has the present intent to sell or (b) those securities that it will more likely than not be required to sell before the anticipated recovery. For those securities that the Company does not have the present intent to sell or for which it is not more likely than not it will be required to sell, the Company must recognize only credit losses in earnings. Non-credit losses are recognized as a charge to other comprehensive income.

14

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 4- Changes in Accounting Principles (Continued)

For other-than-temporary impairment charges recognized in prior periods, the newly issued accounting guidance required the Company to assess whether (a) it had the intent to sell, (b) more likely than not would have been required to sell the related securities and (c) for those not meeting these criteria (a) and (b), determine the decline in fair value attributable to non-credit factors and recognize the cumulative of initially applying the newly issued guidance as an adjustment to the opening balance of members’ capital with a corresponding adjustment to accumulated other comprehensive income.

The cumulative effect of the Company’s adoption of the newly issued accounting guidance resulted in an increase to members’ capital of $23,294,000 and a corresponding decrease to other comprehensive income totaling $23,294,000.

Non-controlling interests

The consolidated financial statements reflect certain retrospective revisions of prior period amounts, resulting from the adoption and retrospective application of newly adopted accounting guidance on related to non-controlling interests. The revisions had no impact on previously reported net income.

Effective January 1, 2009, the Company adopted accounting guidance which establishes and expands accounting and reporting standards for entities that have outstanding minority interests which are re-characterized as non-controlling interests in a subsidiary. It requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure on the face of the consolidated statements of operations and comprehensive income, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. Previously, net income attributable to the non-controlling interest generally was reported as an expense in arriving at consolidated net income. This adoption resulted in (i) the reclassification of minority interests in consolidated subsidiaries to non-controlling interests in consolidated subsidiaries, a component of permanent equity on the Company’s Consolidated Balance Sheet, (ii) the reclassification of minority interest expense to net income attributable to non-controlling interests on the Company’s consolidated statements of operations and comprehensive income, and (iii) additional disclosure relating to non-controlling interests.

Note 5 — Fair Value Measurement

On January 1, 2008, the Company adopted guidance for fair value measurements and the fair value option for financial assets and liabilities. This guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The guidance applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. Accordingly, the standard does not require any new fair value measurements of reported balances. Cash equivalents, available for sale securities, derivative financial instruments, impaired real estate debt investments and real estate debt investments held for sale are reported at fair value.

The accounting standards emphasize that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the 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).

Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability other than quoted prices, such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

15

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 5 — Fair Value Measurement (Continued)

Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

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

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

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

Recurring Measurements

Cash, Cash Equivalents and Restricted Cash

The Company’s cash, cash equivalents and restricted cash are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include most U.S. government securities and most money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy.

Available for Sale Securities

Broker quotations within Level 1 or Level 2 of the hierarchy are obtained if available and practicable. Management typically obtains counterparty quotations for certain of its securities that are pledged under certain repurchase agreements. Such counterparty quotations are predominantly based on the use of unobservable inputs that are considered Level 3 inputs. In addition, the Company uses a third-party pricing model to establish values for the securities in its portfolio. Management also performs further analysis of the performance of the loans and collateral underlying the securities, the estimated value of the collateral supporting such loans and a consideration of local, industry, and broader economic trends and factors. Significant judgment is utilized in the ultimate determination of fair value. This valuation methodology has been characterized as Level 3 in the fair value hierarchy as defined by FASB guidance for fair value measurements.

16

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 5 — Fair Value Measurement (Continued)

Derivative Financial Instruments

The Company has determined that the inputs used to value its derivatives fall primarily within Level 2 of the fair value hierarchy. Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments

(or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Impaired Real Estate Debt Investments

All of the Company’s loans identified as being impaired are collateral dependent loans and are evaluated for impairment by comparing the fair value of the underlying collateral to the carrying value of each loan. Due to the unique nature of the individual property collateralizing the Company’s loans, the Company uses the income or market approach, as deemed appropriate, through internally developed valuation models to estimate the fair value of the collateral. This approach requires the Company to make significant judgments in respect to discount rates and the timing and amounts of estimated future cash flows that are considered Level 3 inputs.

Real Estate Debt Investments Held For Sale

At December 31, 2009, the Company had identified four loans meeting the criteria for held-for-sale treatment. These loans are carried at their fair value of $66,311,000, which represents a decline of $64,143,000 from the Company’s cost basis of $130,454,000. This decline in fair value has been charged to impairment loss on real estate debt investments in the Company’s consolidated statements of operations.

The Company has estimated the fair value of these investments using current market spreads which are reflective of exit prices using market participant assumptions. These assets fall within Level 3 of the fair value hierarchy.

17

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 5 — Fair Value Measurement (Continued)

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2009 aggregated by the level in the fair value hierarchy within which those measurements fall.

	Quoted Prices in
	Active Markets for		Significant Other		Significant
	Identical Assets		Observable		Unobservable		Balance at
	and Liabilities		Inputs		Inputs		December 31,
(in thousands)	(Level 1)		(Level 2)		(Level 3)		2009
Assets
Cash and cash equivalents	$	747	$	—	$	—	$	747
Restricted cash		25,369		—		—		25,369
Impaired real estate debt investments		—		—		15,473		15,473
Real estate debt investments held for sale		—		—		66,311		66,311
Available for sale securities		—		—		83,977		83,977
Liabilities
Derivative financial instruments	$	—	$	12,274	$	—	$	12,274

Changes in Level Three Fair Value Measurements

The tables below includes a roll forward of the balance sheet amounts for the period from January 1, 2010 to August 26, 2010 and January 1, 2009 to December 31, 2009, including the change in fair value, for financial instruments classified by the Company 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.

				Impaired Real			Real Estate Debt
	Available For			Estate Debt			Investments
Period Ended August 26, 2010	Sale Securities			Investments			Held for Sale
(in thousands)
Fair value, January 1, 2010	$	83,977		$	15,473		$	66,311
Transfers in/and or out of level 3		—			—			—
Included in statement of operations:
Net impairment losses recognized in earnings		(3,874	)		—			—
Provision for loan loss contingencies		—			(4,078	)		—
Amortization of discount		637			119			—
Unrealized impairment losses		(5,774	)		—			—
Purchases, issuances and settlements, net		13,248			(17	)		—
Sale of investments		(1,545	)		—			—
Dissolution adjustment		(86,669	)		(11,497	)		(66,311	)
Fair value, August 26, 2010	$	—		$	—		$	—

18

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 5 — Fair Value Measurement (Continued)

				Impaired Real			Real Estate Debt
	Available For			Estate Debt			Investments
Year Ended December 31, 2009	Sale Securities			Investments			Held for Sale
(in thousands)
Fair value, January 1, 2009	$	118,491		$	65,638		$	—
Transfers in/and or out of level 3		—			11,731			276,243
Included in statement of operations:
Accretion income on realized losses		1,071			—			—
Impairment losses on real estate debt investments held for sale		—			—			(101,027	)
Net impairment losses recognized in earnings		(16,302	)		—			—
Provision for loan loss contingencies		—			(52,141	)		—
Amortization of discount		538			170			—
Unrealized impairment losses		(13,468	)		—			—
Purchases, issuances and settlements, net		11			75			(4,857	)
Sale of investments		(6,364	)		(10,000	)		(104,048	)
Fair value, December 31, 2009	$	83,977		$	15,473		$	66,311

Note 6 — Real Estate Debt Investments

Real estate debt investments, consisting of whole loans, B-note participation interests, and mezzanine loans, are intended to be held for investment and, accordingly, are carried at the Company’s investment cost basis, net of unamortized loan purchase discounts and allowances for loan losses when such investments are deemed to be impaired. Whole loans are loans to borrowers who are typically seeking capital for use in property acquisition and are predominantly collateralized by first mortgage liens on real property. B-Notes are junior positions of whole loans. Mezzanine loans are loans that are subordinate to a conventional first mortgage loan, including B Notes and senior to the borrower’s equity in a transaction. These loans may be in the form of a junior participating interest in the senior debt. Mezzanine financing may take the form of loans collateralized by pledges of ownership interests in entities that directly or indirectly control the real property or subordinated loans collateralized by second mortgage liens on the property.

The following table is a summary of the Company’s real estate debt investments at December 31, 2009 (in thousands):

	Real Estate Debt
	Investments,
	Net of Allowance
	December 31, 2009			Loan Count
Whole loans		50,836			4
B-notes		184,550			13
Mezzanine loans		303,979			23
Loan loss allowance		(86,035	)		—
Discounts on loans		(6,060	)		—
Total loans	$	447,270			40

19

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 6 — Real Estate Debt Investments (Continued)

The Company had $70,937,000 of impaired principal real estate debt investments with loan loss allowances of $55,464,000 at December 31, 2009. The Company recorded a provision for loss allowance in real estate debt investments of $106,150,000, $80,620,000 and $31,053,000 for the period from January 1, 2010 to August 26, 2010 (Dissolution) and the years ended December 31, 2009 and 2008, respectively.

The fair value of the Company’s real estate debt investments was $244,313,000 at December 31, 2009.

The following table sets forth the activity in the loan allowance for credit losses account balance for the period from January 1, 2010 to August 26, 2010 (Dissolution) and the years ended December 31, 2009 and 2008 (in thousands):

	2010			2009			2008
Balance at beginning of year	$	(55,464	)	$	(26,021	)	$	—
Charge-offs (1)		3,118			17,900			—
Recoveries		42,421			—			—
Valuation allowance		(111,870	)		(51,343	)		(26,021	)
Transfers (2)		—			4,000			—
Dissolution adjustment		121,795			—			—
Balance at end of year	$	—		$	(55,464	)	$	(26,021	)

(1)	The charge-offs of $17,900,000 for the year ended December 31, 2009 represent allowances for which the Company foreclosed on and the collateral of which was sold or obtained through foreclosure sale.
(2)	Transfers represent loan allowances on real estate debt investments that were transferred to real estate loan assets held for sale.

Credit Risk Concentrations

As of December 31, 2009 no loan exceeded 10% of the Company’s assets and for the year ended December 31, 2009 no single loan generated more than 10% of the Company’s revenue.

Note 7 — Real Estate Debt Investments Held For Sale

Due to the disruption in the capital and credit markets, the continued decline in the fair value of the Company’s assets, and the covenant failures on its debt facilities, the Company was required to identify certain assets to be sold in order to reduce its outstanding balances on its debt.

During 2009 the Company sold six loans that were designated as real estate debt investments held for sale which resulted in losses of $17,566,000.

The Company was not able to completely satisfy its repayment obligation on the Column facility of $60,000,000 by December 31, 2009 and identified four real estate debt investments which were sold in 2010 and the Company recognized additional losses of $545,000 from these transactions and used the proceeds to repay Column and satisfy the remaining accelerated repayment schedule required by the modification.

20

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 8 — Available for Sale Securities

The Company had a portfolio of loan securities (also referred to as available for sale securities) which includes investments in CDO securities, pooled collateralized mortgage backed securities (“CMBS”), and rake bonds. These bonds are accounted for as available for sale securities and, accordingly, are marked to fair value on a quarterly basis based upon management’s assessment of fair value. The Company’s portfolio of available for sale securities was comprised of purchased beneficial interests in 36 CMBS consisting of both Pool and Rake bonds and three CDOs at December 31, 2009.

In April 2009 the Company adopted new accounting guidance on investments in debt and equity securities related to determining whether an impairment for investments in debt securities is other-than-temporary. As a result of the adoption, the Company recognized a cumulative-effect adjustment to retained earnings of $23,294,000 as of April 1, 2009, with a corresponding adjustment to accumulated other comprehensive loss.

The amortized cost and fair value of securities available-for-sale at December 31, 2009 was as follows (in thousands):

	Amortized		Gross Unrealized		Gross Unrealized
December 31, 2009	Cost (1)		Gains		Losses			Fair Value
CMBS
Rake Bonds	$	60,668	$	—	$	(13,804	)	$	46,864
Pool Bonds		59,521		2,176		(25,044	)		36,653
Total CMBS		120,189		2,176		(38,848	)		83,517
CDO		460		—		—			460
Total available for sale securities	$	120,649	$	2,176	$	(38,848	)	$	83,977

(1) Amortized cost basis includes adjustments made to the cost of an investment for accretion, amortization, collection of cash, and previous other-than-temporary impairments recognized in earnings.

The table below shows the fair value of investments in available for sale securities that have been in an unrealized loss position for less than 12 months or for 12 months or longer (in thousands).

	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
December 31, 2009	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
CMBS
Rake Bonds	$	52	$	(986	)	$	45,231	$	(12,819	)	$	45,283	$	(13,805	)
Pool Bonds		4,513		(3,126	)		20,183		(21,918	)		24,696		(25,044	)
Total CMBS		4,565		(4,112	)		65,414		(34,737	)		69,979		(38,849	)
CDO		—		—			—		—			—		—
Total available for sale securities	$	4,565	$	(4,112	)	$	65,414	$	(34,737	)	$	69,979	$	(38,849	)

21

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 8 — Available for Sale Securities (Continued)

The following table presents the amortized cost and fair value of debt securities available for sale by contractual maturity dates as of December 31, 2009 (in thousands).

	December 31, 2009
	Amortized
	Cost		Fair Value
CMBS — Rake Bonds
Due within 1 year	$	36,506	$	28,107
After 1 but within 5 years		13,089		9,750
After 5 but within 10 years		11,072		9,007
After 10 years		—		—
Total CMBS — Rake Bonds		60,667		46,864
CMBS — Pool Bonds
Due within 1 year		33,736		17,277
After 1 but within 5 years		18,609		10,023
After 5 but within 10 years		7,177		9,353
After 10 years		—		—
Total CMBS — Pool Bonds		59,522		36,653
CDO
Due within 1 year		—		—
After 1 but within 5 years		—		—
After 5 but within 10 years		460		460
After 10 years		—		—
Total		460		460
Total available for sale securities	$	120,649	$	83,977

Interest income on the available for sale securities for the period from January 1, 2010 to August 26, 2010 (Dissolution) and years ended December 31, 2009 and 2008 was $3,523,000, $4,320,000 and $9,496,000, respectively.

Evaluating Investments for Other-than-Temporary Impairments

The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded in accumulated other comprehensive loss for available-for-sale securities.

The Company has assessed each position for credit impairment. Securities for which the amortized cost basis exceeds fair value are assessed to determine whether the Company has the present intent to sell the security in which case the entire difference between the amortized cost basis and fair value is recognized in earnings as an other than temporary impairment (“OTTI”). If the Company determines that it will more likely than not be required to sell securities for which the amortized cost basis exceed fair value then the entire difference between fair value and amortized cost basis is recognized in earnings as an other than temporary impairment.

22

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 8 — Available for Sale Securities (Continued)

For securities that the Company does not intend to sell, and does not believe it is more likely than not that it will be required to sell, management performs additional analysis to determine whether or not it will recover its amortized cost basis in the investment. Declines in fair value attributable to credit events are recognized as other than temporary impairment recognized in earnings while declines attributable to other factors are recognized in other comprehensive loss.

Factors considered in determining whether a loss is temporary or other than temporary include:

• The length of time and the extent to which fair value has been below amortized cost basis;

• Adverse conditions specifically related to the security, an industry, or a geographic area;

• The historical and implied volatility of the fair value of the security;

• The payment structure of the debt security;

• Failure of the issuer of the security to make scheduled interest or principal payments;

• Any changes to the rating of the security by the rating agency; and

• Recoveries or additional declines in fair value subsequent to the balance sheet date.

The Company’s review for impairment generally entails:

• Identification and evaluation of investments that have indications of possible impairment;

• Analysis of individual investments that have fair values less than amortized cost, including consideration of the length of time the investment has been in an unrealized loss position and expected recovery period;

• Discussion of evidential matter, including an evaluation of factors or triggers that could cause individual investments to qualify as having other-than-temporary impairment and those that would not support other-than-temporary impairment; and

• Documentation of the results of these analyses, as required under business policies.

A critical component of the evaluation for other-than-temporary impairments is the identification of credit impaired securities where management does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the security. The extent of the Company’s analysis regarding credit quality and the stress on assumptions used in the analysis has been refined for securities where warranted by the current fair value or other characteristics of the security.

The following table presents the total other-then-temporary impairments recognized for the period from January 1, 2010 to August 26, 2010 (Dissolution) and the year ended December 31, 2009 (in thousands).

	2010		2009
Impairment losses related to securities which the Company does not intend to sell or is not more likely than not that it will be required to sell:
Total OTTI losses recognized during the period	$	3,874	$	24,826
Less: portion of OTTI loss recognized in other comprehensive loss		—		(13,468	)
Net impairment losses recognized in earnings for securities that the Company does not intend to sell or is more likely than not that will not be required to sell		3,874		11,358
Plus OTTI Losses recognized in earnings for securities that the Company intends to sell or is more-likely-than-not will be required to sell		—		4,944
Total impairment losses recognized in earnings	$	3,874	$	16,302

23

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 8 — Available for Sale Securities (Continued)

The roll forward of the credit-related position recognized in earnings for all securities still held as of December 31, 2009 is as follows: (in thousands)

	Cumulative Other-Than-Temporary Impairment Credit Losses Recognized in Earnings for
	Available-for-Sale Debt Securities
								Credit
						Credit		impairments
						impairments		recognized in
			Beg Balance			recognized in		earnings on		Reductions due
			Adjustment to			earnings on		securities that		to sales or
			Other			securities not		have been		maturities of
	December 31,		Comprehensive			previously		previously		credit impaired			December 31,
	2008 Balance		Loss			impaired		impaired		securities			2009 Balance
CMBS
Rake Bonds	$	10,938	$	(9,095	)	$	689	$	949	$	—		$	3,481
Pool Bonds		45,896		(15,491	)		—		9,705		(3,009	)		37,101
Total CMBS		56,834		(24,586	)		689		10,654		(3,009	)		40,582
CDO		27,875		—			—		4,959		—			32,834
Total	$	84,709	$	(24,586	)	$	689	$	15,613	$	(3,009	)	$	73,416

The Company does not intend to sell nor does it believe it will be required to sell bond with losses currently deferred in accumulated other comprehensive loss.

Note 9 — Variable Interest Entities

The Company evaluated its investments to determine whether they constitute a variable interest in a variable interest entity (“VIE”). The FASB’s accounting guidance on consolidation requires a VIE to be consolidated by its primary beneficiary. The primary beneficiary is the party that absorbs a majority of the VIE’s anticipated losses and/or a majority of the expected returns.

In connection with and subsequent to the formation of the Company, Concord was determined not to be a VIE entity but rather consolidated Concord pursuant to alternative FASB guidance related to partnerships since the Company is the functional equivalent of a general partner. On August 19, 2009, Concord received an infusion of additional capital totaling approximately $10,150,000 million in the form of a capital contribution of $1,700,000 million made by the Company and short-term demand notes totaling $8,360,000 million, which were subsequently repaid upon the sale of certain of Concord’s assets. These proceeds, which were used to pay down debt and settle five interest rates swaps, resulted in the reconsideration of Concord’s VIE status. In connection with this reconsideration event, the Company determined that Concord is a VIE since it is not sufficiently capitalized to finance its activities primarily due to the significant decline in the fair value of its assets.

The Company determined that it was the primary beneficiary of this VIE since it absorbs the majority of expected residual returns and therefore continued to consolidate Concord.

Under the accounting guidance on consolidations there is a requirement to measure the assets, liabilities and non-controlling interests of the newly consolidated VIE at their fair values at the date that the reporting entity becomes the primary beneficiary. However, because the primary beneficiary of the VIE, the Company, and the VIE,

Concord, are under common control and, as discussed above, Concord was already consolidated in prior periods, albeit under different guidance, no fair value adjustment was necessary.

24

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 9 — Variable Interest Entities (Continued)

At December 31, 2009 the Company identified certain real estate debt investments with aggregate carrying values of $21,465,000. These investments were deemed VIEs primarily based on the fact that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support. The Company has determined that it is not the primary beneficiary of the VIEs as it does not have voting or other rights that allow the Company to exercise control over the borrower entity nor do they have participation features which the Company would be required to absorb expected losses or be entitled to receive expected residual returns of the borrower entities. For the year ended December 31, 2009 no events occurred that would cause the Company to reconsider the VIE status of these debt investments.

Note 10 — Repurchase Agreements

The following table outlines borrowings under the Company’s repurchase agreements as of December 31, 2009:

	December 31, 2009
	Debt Carrying		Collateral Carrying
(in thousands)	Vaue		Value (3)
Royal Bank of Scotland, PLC, successor in interest to Greenwich Capital Financial Products, Inc., matures on February 1, 2012, interest is variable based on 1-month LIBOR rate plus 1% or 1.23% and 2.04% respectively	$	59,550	$	71,530
Royal Bank of Scotland, PLC, successor in interest to Greenwich Capital Financial Products, Inc., matures on January 15, 2011, interest is variable based on 1-month LIBOR rate plus 1% or 1.23% and 1.51% respectively		3,543		6,452
Column Financial Inc., variable interest based on 1- month LIBOR plus 1%, the rate was 1.47% at December 31, 2008. (1)		—		—
Column Financial Inc., expiration December 31, 2010, interest is variable based on 1-month LIBOR plus 0.85% to 1.35%, the weighted average was 1.27%, and 1.49%, respectively. (2)		71,971		74,276
Total repurchase agreements	$	135,064	$	152,258

(1)	In February 2009, the repurchase agreement was terminated and the asset which was subject to this repurchase agreement was added to the multiple loan asset repurchase agreement. The multiple loan asset repurchase agreement was modified to provide that the interest rate, maturity date and advance rate, with respect to the asset added to the multiple loan asset repurchase facility, would remain as it was under the specific repurchase agreement.
(2)	On April 14, 2009, the multiple loan asset repurchase agreement was modified as discussed above.
(3)	Collateral carrying value equals face value less bond discounts, unrealized gains and losses and other-than-temporary impairment losses plus bond premiums and unrealized gains.

25

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 10 — Repurchase Agreements (Continued)

Upon the dissolution of the Company the repurchase agreement liabilities were assumed by the Company’s successor.

The fair value of the Company’s repurchase agreements was $79,358,000 at December 31, 2009.

In certain circumstances, the Company financed the purchase of its real estate debt investments and available for sale securities from a counterparty through a repurchase agreement with the same counterparty. The Company records these investments in the same manner as other investments financed with debt whereby the investment recorded is as an asset and the related borrowing as a liability on the Company’s Consolidated Balance Sheet. Interest income earned on the investments and interest expense incurred on the repurchase obligations are reported separately on the consolidated statements of operations.

Under the terms of the repurchase facility with Column, the Company was required to maintain minimum liquidity, comprised of cash and cash equivalents, of at least $10,000,000 at all times. The Company had failed these requirements during measurements periods in 2010 and 2009 however, the Column facility has been satisfied in full.

In July 2009 Royal Bank of Scotland PLC (“RBS”) agreed to restructure its agreement with the Company. The restructuring of the agreement required a reduction of the outstanding balance by $11,500,000, which was satisfied on July 31, 2009 as a result of the sale of a real estate debt investment. Under the RBS repurchase facilities the Company has a $10,000,000 minimum liquidity requirement. At certain times during the period from January 1, 2010 to August 26, 2010 (Dissolution) and the year ended December 31, 2009 Concord’s cash balance declined to an amount below the $10,000,000 minimum liquidity requirements. In addition, the RBS repurchase facility required the Company to maintain a minimum net worth and a maximum indebtedness to tangible net worth. The Company failed these covenants during 2010 and 2009.

Upon the dissolution of the Company the repurchase agreement liabilities were assumed by the Company’s successor.

Note 11 — Revolving Credit Facility

On September 23, 2009, the Company amended and restated its agreement with KeyBank. Under the terms of this amendment the credit line was reduced from the original $100,000,000 to the actual outstanding balance of $73,666,000 as of the date of the agreement. Key Bank received as additional collateral all remaining unpledged assets including cash and any previously unencumbered loans and bonds the Company had repurchased. Under the conditions of the agreement, no distributions are allowed to be made to the Company’s members until KeyBank is fully repaid. The bank has allowed for a maximum of $650,000 per month in operating expenses, however a mandatory monthly principal payment of $300,000 plus an additional annual principal repayment of $10,000,000 is required or the Company will be in default of the loan. The agreement expires on December 31, 2010 with rights for three — one year extensions through December 31, 2013 at the Company’s option subject to the satisfaction of certain conditions.

Borrowings under the facility bear interest rates based upon prevailing LIBOR plus an applicable spread or an Alternative Base Rate (“ABR”), as defined. At December 31, 2009, the Company’s borrowings bear interest at LIBOR plus 300 bps.

The Company had an outstanding balance on the revolving credit facility of approximately $58,850,000 at December 31, 2009, which was collateralized by a first priority lien on certain of the Company’s equity interests as well as first priority perfected liens in certain of the Company’s loan assets and bonds with a carrying value of $113,959,000. The weighted-average interest rate on amounts outstanding was approximately 3.24% during the year ended December 31, 2009.

26

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 11 — Revolving Credit Facility (Continued)

The terms of the restructured agreement with KeyBank require the Company to maintain a number of customary financial and other covenants on an ongoing basis including: i) maximum leverage ratio not to exceed 75%, ii) minimum fixed charge ratio not less than 1:50 to 1:00, iii)tangible net worth cannot be less than twice the aggregate principal balance of all loans (minimum net worth), iv) cannot payout any restricted payments in excess of 100% of net income (maximum payout ratio), v) prohibition on additional indebtedness.

The Company has failed certain of its covenants during the year ended December 31, 2009, and therefore was in default of its agreement with KeyBank. Under the default provisions, KeyBank has the right to accelerate repayments and all amounts of principal and accrued interest immediately become due and payable. KeyBank has not exercised such rights.

The fair value of the revolving credit facility was $48,657,000 at December 31, 2009.

Upon the dissolution of the Company the revolving credit facility was assumed by the Company’s successor.

Note 12 — Collateralized Debt Obligations

CDO-1 holds assets, consisting primarily of whole loans, mezzanine loans and available for sale securities totaling approximately $444,849,000, which serve as collateral for the CDO. The CDO-1 issued investment grade rated notes with a principal amount of approximately $347,525,000 and a wholly-owned subsidiary of the Company purchased the G and H tranches and preferred equity interests of CDO-1. The seven investment grade tranches were issued with floating rate coupons with a combined weighted average rate of 0.71% and 0.95% at December 31, 2009 and 2008, respectively, and has a maturity of December 2016. The Company has the ability to contribute additional assets to the CDO-1 through December 31, 2011 in order to replenish the assets of the CDO-1 to the extent that an asset of the CDO-1 is repaid prior to such date. Thereafter, the outstanding debt balance will be reduced as loans are repaid. The Company incurred approximately $7,774,000 of issuance costs which are being amortized over the average estimated life of the CDO-1, estimated to be approximately 10 years or when debt is satisfied on a pro rata basis. For accounting purposes, the CDO-1 is consolidated in the Company’s financial statements. The seven investment grade tranches are treated as a secured financing and are non-recourse to the Company. Interest proceeds received from investments collateralizing the CDO are distributed to holders of the CDO notes on a monthly basis.

For the year ended December 31, 2008, the Company purchased $11,200,000 of Tranche D, $5,000,000 of Tranche E, $10,925,000 of Tranche C and $2,000,000 of Tranche F of its CDO-1 notes for $13,110,000. The Company determined that the repurchase of the CDO-1 tranches qualified as an extinguishment of debt pursuant to the guidance for transfers and servicing of financial instruments and recognized a gain on extinguishment of $15,603,000. For the year ended December 31, 2008, unamortized deferred issuance costs of $411,000 were charged against the gains.

The fair value of the collateralized debt obligations was $201,719,000 at December 31, 2009.

CDO-1 contains covenants that are both financial and non-financial in nature. Significant covenants include cash coverage and collateral quality tests. CDO-1 was in compliance with its financial covenants at December 31, 2009 and 2008.

The borrower of a $44,000,000 first mezzanine note owned by Concord (the “Note”) failed to satisfy its obligation when the Note matured in February 2008. On March 28, 2008 Concord sold the Note at par together with accrued interest and late charges to an unaffiliated third party. Concord concluded that this transaction qualified as a sale pursuant to the accounting guidance for transfers of financial assets. Concurrently with the sale of the Note, the Company entered into a credit support arrangement with Deutsche Bank (the “Bank”) for which Concord, subject to certain terms and conditions, was required to return a portion of the purchase price of the Note equal to 2.75% of any shortfall received by the buyer of the Note on the sale of the underlying real property in satisfaction of the loan.

27

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 12 — Collateralized Debt Obligations (Continued)

As consideration for the collateral support arrangement, Concord has received cumulative fees of $1,589,000 through July 2009. Upon entering into the collateral support arrangement, Concord determined that it meets the criteria of a guarantee pursuant to the accounting guidance for guarantees and estimated the fair value of the guarantee at inception to be approximately $50,000.

During July 2009 the Concord received notice that pursuant to the credit support arrangement, a collateral deficiency was realized on the aggregate net proceeds from the sale of the underlying collateral of the Note for which Concord was allocated 2.75% of the total deficiency. Accordingly, a collateral support obligation has been recorded for the aggregate liability amount of $9,757,000 at December 31, 2009.

On December 10, 2009, a final arbitration ruling was issued and a settlement amount for Concord’s share of the shortfall of $9,598,000 plus per diem interest and expenses of $159,000 was awarded to the Bank.

Upon the sale of the CDO-1 by the Company the collateralized debt obligation was assumed by the CDH CDO LLC.

Note 13 — Sub-participation obligation

On October 14, 2009, the Company received a principal repayment of $6,000,000 in partial satisfaction of a loan collateralized by a hotel located in New York, NY. In exchange, the Company granted to the borrower waivers of certain loan conditions and agreed to exercise its rights under the loan in accordance with instructions furnished by the borrower. Concurrently with the execution of the agreement, the borrower also purchased sub-participation interests in certain bonds owned by the Company for approximately $4,500,000. The sub-participation obligation requires the Company to remit to the borrower principal and interest payments received from the bonds. The collateral for the bonds that are subject to the sub-participation obligation are controlled by the borrower.

In addition, the Company has written certain call options giving the borrower the right to purchase the bonds that are subject to the sub-participation obligation. The call options are exercisable at the discretion of the borrower at anytime through the maturity date of the bonds for a specified strike price. The Company has also written a call option for one of the bonds to an unaffiliated third party that is only exercisable upon either the expiration of the borrower’s call option or the event of default by the borrower as specified in the option agreement. The Company has determined that the call options are not derivative instruments, but should be marked to fair value with changes in fair value recognized in earnings. The fair value of the call options written to both the borrower and the unaffiliated third party were not considered material and therefore have not been recorded at December 31, 2009.

Note 14 — Derivative Financial Instruments

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and expected cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

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

28

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 14 — Derivative Financial Instruments (Continued)

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income (Loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the years ended December 31, 2009, 2008 and 2007, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The Company also assesses and documents, both at the hedging instruments inception and on an ongoing basis, whether the derivative instruments are highly effective in achieving offsetting changes in the cash flows attributable to the hedged items. The Company has recorded changes in fair value related to the effective portion of its interest swap contracts designated and qualifying as cash flow hedges totaling an increase of $16,539,000 for the period from January 1, 2010 to August 26, 2010 (Dissolution) and a decrease of $16,539,000 for the year ended December 31, 2009. This change was a component of other liabilities and accumulated other comprehensive loss within the Company’s Consolidated Balance Sheet.

Designated Hedges

On August 19, 2009, the Company terminated five interest rate swap agreements consisting of four designated cash flow hedging instruments with a notional value of $54,375,000 and one hedging derivative not designated as a cash flow hedge with a notional value of $11,000,000. The cost to terminate the five hedges was $8,221,000. A loss of $74,000 which includes a termination fee was recognized for the period ended December 31, 2009.

The Company has recorded changes in fair value related to the deferred loss on the cancellation of interest rate swaps totaling an decrease of $5,870,000 for the period from January 1, 2010 to August 26, 2010 (Dissolution), an increase of $5,870,000 for the year ended December 31, 2009, a decrease of $63,000 for the year ended December 31, 2008. This change was a component of other liabilities and accumulated other comprehensive loss within the Company’s Consolidated Balance Sheet at December 31, 2009.

There was no ineffective portion of the change in fair value of the designated hedges recognized directly in earnings during the years ended December 31, 2009 and 2008 respectively. The Company completed the restructuring as discussed in Note 1 and the deferred loss was reclassified as loss and was recognized in earnings for the period from January 1, 2010 to August 26, 2010.

As of December 31, 2009, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk which mature in August 2016:

Interest Rate Derivative	Number of Instruments		Notional
Interest Rate Swaps		2	$	137,887,000

Non-designated Hedges

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of derivatives. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and were equal to $683,686 of income for the year ended December 31, 2009 and $1,478,000 of expense for the year ended December 31, 2008.

29

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 14 — Derivative Financial Instruments (Continued)

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of December 31, 2009 (in thousands):

Liability Derivatives	Balance Sheet
(in thousands)	Location	Fair Value
Derivatives designated as hedging instruments under SFAS 133
Interest Rate Swap	Other Liabilities	$	8,714
Interest Rate Swap	Other Liabilities		3,560
Total derivatives designated as hedging instruments under SFAS 133		$	12,274

Note 15 — Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss reflected in members’ capital as of August 26, 2010 (Dissolution) and December 31, 2009 is comprised of the following:

(in thousands)	2010			2009
Unrealized losses on cash flow hedges	$	(17,762	)	$	(12,274	)
Deferred loss on cancellation of interest rate swaps		(5,201	)		(6,203	)
Unrealized gains/(losses) on available-for-sale securities		(7,603	)		(13,377	)
Adjustment for cumulative effect of adopting new accounting pronoucement		(23,294	)		(23,294	)
Dissolution adjustment		53,860			—
	$	—		$	(55,148	)

Note 16 — Discontinued Operations

The Company was granted a decree of foreclosure from the United States District Court of Ohio on April 15, 2009 on a mortgage loan asset with a face value of $20,900,000 and carrying value of $12,000,000 at the date of foreclosure. As a result of the decree, the Court granted the Company a permanent order of possession over six properties, which represented the collateral on the loan, and a foreclosure sale occurred on October 7, 2009 at which time the Company was the successful bidder and received title to six multi-family Ohio residential properties with an estimated fair value of $11,202,000.

For the period from January 1, 2010 to August 26, 2010 (Dissolution), two of the properties were sold for an aggregate net selling price of $2,818,000 and four properties were sold during the period ended December 31, 2009 for an aggregate net selling price of $7,676,000 which included a $955,000 short term seller financing that was repaid by the borrower on April 7, 2010.

30

LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 16 — Discontinued Operations (Continued)

The combined results related to discontinued operations for the period from January 1, 2010 to August 26, 2010 (Dissolution) and the year ended December 31, 2009 were as follows (in thousands):

	2010			2009
Total revenues	$	159		$	332
Total expenses		(422	)		(1,291	)
Loss on discontined operations		(708	)		—
Loss from discontinued operations	$	(971	)	$	(959	)

Note 17 — Dividends

In order for the Company’s consolidated subsidiary, Concord Debt Funding Trust, to maintain its election to qualify as a REIT, it must distribute, at a minimum, an amount equal to 90% of its taxable income to its shareholders. For the years ended December 31, 2009 and 2008 dividends were comprised of 100% ordinary dividends. Because taxable income differs from cash flow from operations due to non-cash revenues and expenses, the Company may generate operating cash flow in amounts below or in excess of its dividends.

At December 31, 2009, the Company’s members’ capital was $289,798,000 for federal tax reporting purposes as compared to $58,780,000 for financial reporting purposes.

Note 18 — Related Party Transactions

WRP Sub-Management LLC

Since January 1, 2007, WRP Management has retained WRP Sub-Management to perform accounting collateral management and loan brokerage services.

On August 2, 2008, the Company, WRP Management and WRP Sub-Management entered into an Administration and Advisory Agreement whereby WRP Sub-Management became the Administrative Manager to provide day-to-day management, collateral management and administrative services for the Company. For providing these management services, WRP Sub-Management is entitled to receive a base management fee equal to five basis points multiplied by the total assets of the Company. The Administrative Manager is also entitled to receive loan acquisition fees based on pre-determined budgeted amount and reimbursement for actual out-of-pocket expenses. Related party fees and expenses paid for the period from January 1, 2010 to August 26, 2010 (Dissolution) and the years ended December 31, 2009 and 2008 are as follows (in thousands):

	2010		2009		2008
Base management fee	$	361	$	533	$	—
Employee wages and benefits		228		647		1,960
Total related party fees and expenses paid	$	589	$	1,180	$	1,960

Related party fees and expenses recorded on an accrual basis were $469,695 for the period from January 1, 2010 to August 26, 2010 (Dissolution) and $1,108,000 and $1,637,000 or the years ended December 31, 2009 and 2008, respectively.

At December 31, 2009, the Company owed WRP Sub-Management $163,000.

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LEX-WIN CONCORD LLC
Notes to Consolidated Financial Statements
(Information from January 1, 2010 to August 26, 2010 (Dissolution) is Unaudited)

Note 18 — Related Party Transactions (Continued)

Note Payable to Related Parties

On December 31, 2008, Winthrop and Lexington each advanced proceeds of $5,000,000 to the Company pursuant to short-term demand notes bearing interest at 1.36%. These notes were subsequently repaid to each of Winthrop and Lexington in January 2009 along with accrued interest.

On August 19, 2009, Winthrop and Lexington each advanced proceeds of $4,160,000 to the Company pursuant to short-term demand notes bearing interest of 5.44%. These notes were subsequently repaid to each of Winthrop and Lexington in September 2009 along with accrued interest.

Sale of Assets to Winthrop

During 2009, the Company sold four real estate debt investments and four bonds with an aggregate carrying value of $84,302,000 to Winthrop for net proceeds of $53,339,000.

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