Equity Investments

9 Months Ended

Sep. 30, 2011

Equity Investments

The Trust’s equity investments consist of the following at September 30, 2011 and December 31, 2010 (in thousands):


		Nominal % Ownership			September 30,		December 31,
Venture Partner	Equity Investment	at September 30, 2011			2011		2010

Marc Realty (1)	8 South Michigan LLC		N/A		$	—	$	7,087
Marc Realty (1)	11 East Adams Street LLC		N/A			—		3,223
Marc Realty (1)	29 East Madison Street LLC		N/A			—		7,720
Marc Realty (1)	Michigan 30 LLC		50.0	%		12,045		12,080
Marc Realty (1)	Brooks Building LLC		50.0	%		7,880		7,452
Marc Realty (1)	High Point Plaza LLC		50.0	%		6,198		6,275
Marc Realty (1)	Salt Creek LLC		50.0	%		2,266		2,344
Marc Realty (1)	1701 Woodfield LLC		50.0	%		3,977		4,221
Marc Realty (1)	River Road LLC		50.0	%		4,023		4,123
Marc Realty (1)	3701 Algonquin Road LLC		50.0	%		2,694		2,931
Marc Realty (1)	Enterprise Center LLC		50.0	%		2,730		3,018
Marc Realty (1)	900 Ridgebrook LLC		50.0	%		1,606		1,676
Sealy (1)	Northwest Atlanta Partners LP		60.0	%		8,651		2,479
Sealy (1)	Newmarket GP LLC		68.0	%		3,932		6,647
Sealy	Airpark Nashville GP		50.0	%		1,799		2,778
Inland/Lexington	Concord Debt Holdings LLC		33.3	%		—		—
Inland/Lexington	CDH CDO LLC		33.3	%		—		—
ROIC (1)	WRT-ROIC Riverside LLC		50.0	%		7,883		7,883
ROIC	WRT-ROIC Lakeside Eagle LLC		50.0	%		9		—
Atrium Holding	RE CDO Management LLC		50.0	%		1,273		—
Lexington (1)	LW-SOFI LLC		50.0	%		6,877		—
VHH LLC (1)	Vintage Housing LLC		75.0	%		30,513		—
Broadway Partners	FII Co-Invest LLC		27.9	%		1,800		—

					$	106,156	$	81,937


(1)		The Trust has determined that these equity investments are investments in VIEs. The Trust has determined that it is not the primary beneficiary of these VIEs since the Trust does not have the power to direct the activities that most significantly impact the VIEs economic performance.

The following table reflects the activity of the Trust’s equity investments for the period ended September 30, 2011 (in thousands):


														Balance at
	Balance at				Equity Income									September 30,
Investment	December 31, 2010		Contributions		(loss)			Distributions			Sales			2011

Marc Realty	$	62,150	$	2,011	$	(319	)	$	(2,264	)	$	(18,159	)	$	43,419
Sealy		11,904		4,650		(1,922	)		(250	)		—			14,382
Concord Debt Holdings		—		—		2,721			(2,721	)		—			—
CDH CDO		—		—		307			(307	)		—			—
WRT-ROIC Riverside		7,883		—		702			(702	)		—			7,883
WRT-ROIC Lakeside Eagle		—		18,093		666			(18,750	)		—			9
WRT-46th Street Gotham		—		8,037		621			(8,658	)		—			—
RE CDO Management		—		1,250		23			—			—			1,273
LW-SOFI		—		5,760		1,117			—			—			6,877
Vintage Housing		—		30,950		424			(861	)		—			30,513
FII Co-invest		—		1,800		—			—			—			1,800


Total	$	81,937	$	72,551	$	4,340		$	(34,513	)	$	(18,159	)	$	106,156

On June 23, 2011 the Trust’s Sealy Northwest Atlanta venture fully satisfied its $28,750,000 first mortgage loan plus accrued interest of approximately $1,083,000 (net of escrowed funds) for a negotiated discounted payoff amount of $20,500,000. As a result of the discounted payoff, the venture recognized approximately $9,203,000 of cancellation of debt income of which $5,522,000 was allocated to the Trust. The allocation of income effectively increases the carrying value of the Trust’s investment in the venture.

At June 30, 2011 the Trust determined that, as a result of current market conditions, including current occupancy levels, current rental rates and an increase in terminal capitalization rates, the fair value of its equity investments in Sealy Northwest Atlanta and Sealy Newmarket were below the carrying values. Accordingly, the Trust assessed whether this decline in value was other-than-temporary. In making this determination, the Trust considered the length of time which the decline has occurred, the length of time before an expected recovery and the lack of any comparables in the market. The Trust determined the fair value of its investments utilizing an unleveraged cash flow methodology with a 10 year hold period and an estimated terminal capitalization rate. The cash flows were then discounted using an estimated market rate. Based on the foregoing, all of which requires significant judgment, the Trust concluded that the declines in value were other-than-temporary, and the Trust recorded other-than-temporary impairment charges of $2,900,000 and $900,000 on its investments in Sealy Northwest Atlanta and Sealy Newmarket, respectively, during the nine months ended September 30, 2011. The Trust has determined that the fair value of its Sealy Northwest Atlanta investment marginally exceeds its carrying value at September 30, 2011.

In relation to its investment in Vintage Housing, the Trust has elected a one-month lag period in which it recognizes its share of the equity earnings of Vintage Housing in arrears. The lag period is allowed under the provisions of ASC 810-10 and is necessary in order for the Trust to consistently meet its regulatory filing deadlines. The Vintage Housing joint venture consolidated balance sheet consists of assets totaling approximately $320,000,000 with mortgage notes payable of approximately $210,000,000 as of August 31, 2011.

The Trust has determined that the fair value of certain of its Marc Realty investments 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 Marc Realty ventures that could be material to the Trust’s results of operations.

During the quarter ended September 30, 2011 the Trust received cash distributions from Concord Debt Holdings LLC of $2,549,000. The Trust recognized equity income for the full amount of the distributions. The Concord Debt Holdings LLC balance sheet consisted of total assets of $28,079,000 and $126,463,000 at September 30, 2011 and December 31, 2010, respectively, and total liabilities of $101,000 and $99,321,000 at September 30, 2011 and December 31, 2010, respectively. Concord Debt Holdings LLC had net income of $4,368,000 and $9,962,000 for the three and nine months ended September 30, 2011 and a net loss of $308,000 for the period from the reorganization date (August 26, 2010) to September 30, 2010.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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