Financing, Acquisition and Disposition Activities

6 Months Ended

Jun. 30, 2011

Financing, Acquisition and Disposition Activities [Abstract]

Financing, Acquisition and Disposition Activities

4. Financing, Acquisition and Disposition Activities

Financing Activities

Public Offering — On April 6, 2011, the Trust closed a public offering of 5,750,000 Common Shares at a price of $11.25 per share before underwriters discount and received net proceeds of approximately $61,386,000. A portion of the proceeds were utilized to pay down the Trust’s revolving line of credit.

Sealy Northwest Atlanta Loan - On June 23, 2011 the Trust made a $20,641,000 bridge loan to its Sealy Northwest Atlanta joint venture which holds a 471,952 square foot flex-office complex in Marietta, GA. The Trust’s bridge loan enabled the joint venture to satisfy its $28,750,000 first mortgage loan at a discounted payoff amount of $20,500,000. The bridge loan bears interest at 8% per annum and matures on November 1, 2011. The joint venture is currently negotiating with a third party lender and expects to secure replacement financing prior to November 1, 2011.

Acquisition Activities

450 West 14th Street / 446 High Line LLC Investment — On May 13, 2011, the Trust committed to invest up to $15,000,000 for a preferred equity interest in the entity that holds the leasehold interest in a newly constructed 73% pre-leased 102,000 square foot retail and office property located on the High Line at 450 West 14th Street, New York, New York. The investment is subject to a $54,000,000 first mortgage loan. As of June 30, 2011 the Trust has invested a total of $5,965,000. The Trust accounts for this investment as a preferred equity investment.

Magazine Mezzanine Loan — On June 1, 2011, the Trust acquired from Concord Debt Holdings LLC (“Concord”) for a purchase price of $17,525,000 a $20,000,000 senior mezzanine loan collateralized by a pledge of the equity interest in six cross-collateralized, cross-defaulted apartment communities, totaling 2,106 units located in Orlando, Sarasota, Bradenton and Palm Beach Gardens, Florida. The loan is subordinate to $120,000,000 of senior debt, is currently paying one month LIBOR plus 123 basis points and is scheduled to mature on July 9, 2012. The Trust accounts for this investment as a loan receivable.

Sofitel / LW Sofi LLC Investment — On June 2, 2011, the Trust entered into a 50/50 joint venture with Lexington Realty Trust (“Lexington”) named LW SOFI LLC (“LW SOFI”). The Trust and Lexington each contributed approximately $5,760,000 to LW SOFI. On June 3, LW SOFI acquired from Concord for approximately $11,520,000, 100% of the economic rights and obligations in a $71,530,000 mezzanine loan collateralized by an interest in the Sofitel hotel in New York City. The loan is interest only, bears interest at LIBOR plus 185 basis points and matures on February 1, 2012. The loan is encumbered by a $56,090,000 repurchase obligation that charges interest at a variable interest rate of 1-month LIBOR plus 100 basis points and matures on December 31, 2012. The Trust accounts for this investment using the equity method of accounting.

Vintage Housing Holdings LLC Investment- On March 8, 2011, the first stage of the Vintage Housing Holdings LLC (“Vintage”) transaction closed pursuant to which the Trust acquired developer fees and advances receivable owed by real estate partnerships for a purchase price of $7,000,000. On June 24, 2011, the Trust closed on the second phase of its Vintage transaction to acquire for $18,200,000, plus a contribution of its previously purchased receivables, an effective 75% interest in the Vintage venture entitling the Trust to a 12% preferred return from current cash flow. Vintage owns general partnership interests and certain developer fees and advances receivable from partnerships owning 25 multifamily and senior housing properties comprising approximately 4,200 units located primarily in the Pacific Northwest and California. The Trust accounts for its investment in Vintage using the equity method of accounting.

Sorin / RE CDO Management Investment — On June 29, 2011, the Trust entered into a new joint venture with Gotham Hotel Funding LLC, an affiliate of Atrium Holding Company (“Atrium”), named RE CDO Management LLC (“RE CDO”). The Trust and Atrium each contributed approximately $1,250,000 to RE CDO which purchased certain collateral management agreements and subordinated interests related to two collateralized debt obligation entities that hold loans and loan securities. The Trust accounts for this investment using the equity method of accounting.

Disposition Activity

Marc Realty — On June 1, 2011 the Trust sold to its partner, Marc Realty, for $18,544,000 its equity interest in three properties in its Marc Realty Portfolio (8 South Michigan, 11 East Adams and 29 East Madison). The purchase price was paid $6,000,000 in cash and $12,544,000 in aggregate secured promissory notes which each bear interest at 8% per annum, require payments of interest only and mature on May 31, 2016. Pursuant to the guidance for sales of real estate, the Trust has deferred recognition of the gain of $385,000.

Loan Asset Repayments

Lakeside Eagle Loans — In May 2011 the Trust received repayments on its two non-performing first mortgage loans acquired on March 22, 2011 which the Trust owned through its Lakeside Eagle LLC joint venture with Retail Opportunity Investments Corporation. The Trust received repayments totaling $18,650,000 on its $18,093,000 investment which represented its pro-rata share of the equity investment.

Gotham Hotel Loan — On May 24, 2011 the Trust received repayment on its performing first mortgage loan acquired on February 23, 2011 which the Trust owned through its WRT-46th Street Gotham LLC joint venture with Atrium. The Trust received repayment of $8,638,000 on its $8,037,000 investment which represented its pro-rata share of the equity investment.

Siete Square Loan — On June 9, 2011 the borrower on the Trust’s Sub-Participation B Interest with a carrying amount of $2,500,000 exercised its discount payoff option and repaid the loan in full. The performing loan asset was originally acquired in June 2009 for $2,460,000.

CDH CDO LLC — During the quarter ended June 30, 2011 CDH CDO LLC made various repayments satisfying approximately $3,450,000 on its loan payable to the Trust. As of June 30, 2011 the loan had a balance of $742,000.

Foreclosure Activity

Cypress Pointe Apartments — On April 6, 2011, the Trust was admitted as a member in an entity that holds an approximately $2,500,000 non-performing junior mezzanine loan indirectly secured by a 194 unit apartment complex located in Jacksonville, Florida. The loan matured on March 30, 2011 and the venture commenced foreclosure on its collateral. The Trust currently accounts for its participation in the venture on the equity method of accounting. The Trust has not yet funded any amounts to this venture and consequently the investment balance is currently zero.