Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Subsequent Events

24. Subsequent Events

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.

Playa Vista Mezzanine Loan – On January 24, 2013 the Trust originated a $20,500,000 mezzanine loan collateralized indirectly by a 260,000 square foot, two building, Class A office campus commonly referred to as Water’s Edge at Playa Vista which is located three miles from Los Angeles International Airport. The loan, which is subordinate to an $80,300,000 mortgage loan, matures January 23, 2015, bears interest at a rate of LIBOR plus 14.25% per annum, with a 0.50% LIBOR floor, and requires monthly payments of interest only at a rate of 8.25% per annum with the remaining accrued interest being added to principal. In addition, at maturity the Trust is entitled to a participation interest equal to 25% of net equity value or sales proceeds of the property or, alternatively, if the property is not sold, the borrower can issue to the Trust a 25% ownership interest in the property. On March 1, 2013 the Trust sold at par a 50% pari passu participation interest in the loan.

RE CDO Management – On February 20, 2013 the collateral management agreement and subordinated interests related to a collateralized debt obligation entity were sold for $2,750,000. The Trust received net proceeds from the sale of approximately $1,296,000. On March 8, 2013 the C Notes in another collateralized debt obligation entity were sold for $6,240,000. The Trust received net proceeds from the sale of approximately $3,120,000.

Queensridge Loan/Recourse Secured Financing – Subsequent to December 31, 2012 the Trust has received principal repayments totaling $5,987,000 resulting from the sale of several of the condominium units collateralizing the loan. Concurrently with the receipts, the Trust made aggregate principal payments of $5,987,000 on its recourse secured financing collateralized by the Queensridge loan.

Advisory Agreement – The Trust modified its advisory agreement with FUR Advisors effective January 1, 2013 to, among other things, extended the term for five years (subject to earlier termination by the Trust for both cause (as defined) and without cause), modified the required return on the threshold amount for which the incentive fee is payable and provided for a supplemental fee payable to FUR Advisors in the event of an early termination of the Advisory Agreement under certain circumstance or on the liquidation or disposition of the Trust.

As modified, the calculation of the base asset management fee is unchanged but the Advisory Agreement now provides that any dividends paid on account of Common Shares that result in a reduction of the threshold amount (as described below) at the date of the Trust’s liquidation or disposition are deemed a reduction in the aggregate issuance price of the Common Shares, thereby resulting in a reduction of the base management fee.

The growth factor on the incentive fee was modified from 7% per annum to the greater of (x) 4% or (y) the 5 year U.S. Treasury Yield plus 2.5% (such return, the “Growth Factor”). The incentive fee still equals to 20% of any amounts available for distribution in excess of the threshold amount and is only payable at such time, if at all, (x) when holders of the Common Shares receive aggregate dividends above the threshold amount or (y) upon termination of the Advisory Agreement, if the net value of the Trust’s 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 common shareholders have received dividends in excess of the threshold amount. The threshold amount is equal to $534,224,000 (the threshold amount at December 31, 2012) plus the issuance price for any equity interests in the Trust issued from and after January 1, 2013 plus an annual return thereon equal to the Growth Factor less any dividends paid from and after January 1, 2013. The incentive fee will also be payable if the Advisory Agreement is terminated, other than for cause (as defined) by the Trust or with cause by FUR Advisors, and if on the date of termination the net value of the Trust’s assets exceeds the threshold amount.

With respect to the supplemental fee, it is only payable if there is (i) a termination of the Advisory Agreement for any reason other than for cause (as defined) by the Trust or with cause by FUR Advisors, (ii) a disposition of all or substantially all of the Trust’s assets, or (iii) an election by the Trust to orderly liquidate its assets. The supplemental fee, if payable, is equal to the lesser of (i) the base management fee paid to FUR Advisors for the prior twelve month period or (ii) either (x) in the case of a termination of the Advisory Agreement, 20% of the positive difference, if any between (A) the appraised net asset value of the Trust’s assets at the date of termination and (B) the threshold amount less $104,980,000, or (y) in the case of a disposition or liquidation, 20% of any dividends paid on account of Common Shares at such time as the threshold amount is reduced to $104,980,000, which will be achieved at such time as aggregate distributions of approximately $13.00 in excess of the Growth Factor have been paid. For example, if the Trust had been liquidated at January 1, 2013, the supplemental fee would only have been payable if total dividends of approximately $13.00 per Common Share had been paid, and then only until the total supplemental fee paid would have equaled $8,953,000 (the base asset management fee for calendar 2012), which amount would be achieved when total dividends paid per Common Share equaled approximately $14.36.

In the event that the supplemental fee is payable in connection with a disposition, the entire fee is payable upon such disposition. In all other cases where the supplemental fee is payable, the Trust is permitted to defer payment of the first $3,000,000 of the supplemental fee for 30 days and the balance, if any, for a period of six months. If it is determined that the supplemental fee is less than $3,000,000, FUR Advisors is obligated to promptly return to the Trust the difference between the $3,000,000 paid to it and the actual supplemental fee.