4.	Acquisitions, Dispositions, Leasing and Financing Activities

Operating Property Activity:

1515 Market Street – loan modification and equity acquisition - On February 1, 2013 the Trust entered into a loan modification agreement which extended the maturity date to February 1, 2016, increased the loan balance to $71,629,000 (from $70,000,000) and changed the interest rate to be the greater of 7.5% or LIBOR plus 6.5%. The loan balance can be increased through future funding advances up to an aggregate of $6,000,000 to cover tenant improvements, capital expenditures and leasing commissions. For each $500,000 of future advances, the interest rate increases by 0.10%. The loan modification also provides the lender with a 40% participation interest in the case of a capital event.

Simultaneously with the modification of the loan, the Trust acquired, for $10,000, an indirect 49% equity interest in the property. As part of the transaction, the Trust acquired the general partner interest in the property. Management has determined that this entity is a variable interest entity (“VIE”) and that the Trust is the primary beneficiary of the VIE (see Note 18). As a result, the Trust has consolidated this property as of February 1, 2013. All intercompany transactions have been eliminated in consolidation. For segment reporting purposes, this investment will be classified within the operating properties segment as of February 1, 2013. Prior to consolidation, this investment was part of the loan assets segment.

The fair value of the assets and liabilities of the consolidated property was calculated by an independent third party valuation firm and reviewed by management. The following table summarizes the provisional allocation of the aggregate purchase price of 1515 Market Street as of February 1, 2013 (in thousands):


	1515 Market Street
Land	$	18,627
Building		23,159
Other improvements		73
Tenant improvements		1,407
Lease intangibles		14,943
Above market lease intangibles		2,867
Net working capital acquired		1,132
Below market lease intangibles		(620	)
Other liabilities		(1,299	)
Long term liabilities assumed		(60,279	) (1)

Net assets acquired	$	10

(1)	Long term liabilities assumed as part of this transaction remain legally outstanding but are eliminated in consolidation with the Trust’s loan asset purchased on December 12, 2012.

Intangible assets acquired and intangible liabilities assumed for 1515 Market Street consisted of the following (in thousands):


	Carrying Value			Weighted Average Amortization Period (years)
Intangible assets:
In place lease intangibles	$	6,542			6.2
Above market lease intangibles		2,867			5.8
Tenant relationship value		7,388			13.3
Lease commissions, legal and marketing fees		1,013			5.4


Total	$	17,810			9.0

Intangible liabilities:
Below market lease intangibles	$	(620	)		4.2

For the three and six months ended June 30, 2013, 1515 Market Street contributed revenue of approximately $2,632,000 and $4,493,000, respectively, and contributed net income of approximately $576,000 and $1,072,000, respectively.

The accompanying unaudited pro forma information for the three and six months ended June 30, 2013 and 2012 is presented as if the consolidation of 1515 Market Street on February 1, 2013 had occurred on January 1, 2012. This unaudited pro forma information is based upon the historical consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto. This unaudited pro forma information does not purport to represent what the actual results of operations of the Trust would have been had the above occurred, nor do they purport to predict the results of operations of future periods.


Pro forma (unaudited)	For the Three Months Ended				For the Six Months Ended
(In thousands, except for per share data)	June 30,				June 30,
	2013		2012		2013		2012

Total revenue	$	19,230	$	17,027	$	40,660	$	39,762
Consolidated net income		7,745		2,885		20,664		10,581
Net income attributable to Winthrop Realty Trust		8,374		3,358		22,361		12,547
Per common share data - basic		0.17		0.02		0.51		0.27
Per common share data - diluted		0.17		0.02		0.51		0.27

Deer Valley – property sale - On June 11, 2013 the Trust sold its Deer Valley, Arizona property to an independent third party for gross sale proceeds of $20,500,000. After costs and pro-rations, the Trust received net proceeds of approximately $19,585,000 and recorded a gain of $6,752,000 on the sale of the property. The results of operations for this property have been classified as discontinued operations for all periods presented in the consolidated interim financial statements.

Loan Asset Activity:

Fenway Shea – loan payoff - On June 14, 2013 the $2,250,000 loan collateralized by the property located at Shea Blvd in Phoenix, Arizona was paid off in full at par. There was no gain or loss recognized on the payoff.

Atrium Mall LLC – joint venture loan acquisition - On June 20, 2013 the Trust, through a newly formed 50-50 joint venture with Marc Realty, acquired a non-performing $10,650,000 mortgage loan for $6,625,000. In addition, the joint venture paid $1,137,000 to fund escrows at the closing. The Trust invested a total of $3,935,000 in this venture during the quarter ended June 30, 2013 and will account for this investment using the equity method. The loan was in maturity default at the time of acquisition and was acquired with the intention of foreclosing or working out a consensual assignment with the borrower. The loan is collateralized by a leasehold interest in the Atrium Mall in Chicago, Illinois. The leasehold interest is for 71,000 square feet of commercial/retail space that comprises the bottom three floors of an office building known as the James R Thompson building which lease expires in September 2014 with six automatic five-year extensions which are exercisable at the lessee’s option. The building is owned by the State of Illinois. See “Note 18-Subsequent Events”.

Financing Activity:

Recourse Secured Financings – loan payments - During the three and six months ended June 30, 2013, several of the condominium units collateralizing the Queensridge loan receivable were sold resulting in payments to the Trust of approximately $14,960,000 and $25,077,000, respectively. The Trust made corresponding pay downs of $13,653,000 and $23,770,000, respectively on its recourse debt with KeyBank which fully satisfied the Trust’s debt at June 30, 2013.

1515 Market Street – new first mortgage - On April 25, 2013 the entity that holds title to the property located at 1515 Market Street in Philadelphia, Pennsylvania (the “1515 Market Owner”) obtained a $43,000,000 non-recourse first mortgage loan (“First Mortgage”) from an unaffiliated third party. The First Mortgage bears interest at LIBOR plus 2.0% per annum, requires monthly payments of interest only and matures on May 1, 2016. On the same date, the Trust entered into an interest rate swap agreement which effectively fixes LIBOR at 0.50% for the term of the First Mortgage. The Trust, which held the mortgage loan (“Original Mortgage”) collateralized by the property at the time of the closing of the First Mortgage, received $38,472,000 of loan proceeds from the First Mortgage financing which reduced the balance on the Original Mortgage to $33,157,000. The Original Mortgage is now subordinate to the First Mortgage, bears interest at an effective rate of 12.9% per annum and is secured by a second mortgage on the property. The Trust’s investment in the Original Mortgage has been reduced to $21,098,000 resulting in an effective interest rate on the Trust’s cash investment in this asset of 19.6%. Due to the Trust’s ownership of a 49% interest, including the general partner interest, in the 1515 Market Owner and an additional 40% profits participation interest in the property, the Trust consolidates the operation of this property and the Original Mortgage, and all intercompany transactions are eliminated in consolidation.

Churchill – financing - On June 28, 2013 the Trust obtained a $5,100,000 first mortgage on its Churchill, Pennsylvania property. The loan bears interest at a rate of 3.5% per annum, requires monthly payments of principal and interest and matures on August 1, 2024. After closing costs, the Trust received net proceeds of approximately $4,922,000.