7.	Equity Investments

The Trust’s carrying amounts in its equity investments consist of the following at September 30, 2013 and December 31, 2012 (in thousands):


Venture Partner	Equity Investment	Nominal % Ownership at September 30, 2013			September 30, 2013		December 31, 2012

VHH LLC (1)	Vintage Housing Holding LLC		75.0	%	$	33,706	$	30,534
Elad Canada Inc.	WRT-Elad One South State Equity LP		50.0	%		—		460
Elad Canada Inc.	WRT-Elad One South State Lender LP		50.0	%		24,518		24,644
Mack-Cali	WRT-Stamford LLC		20.0	%		8,916		8,501
Atrium/Northstar	10 Metrotech Loan LLC		33.3	%		11		10,845
Atrium Holding	RE CDO Management LLC		50.0	%		993		1,779
Freed	Mentor Retail LLC		49.9	%		596		551
Inland	Concord Debt Holdings LLC		33.3	%		—		—
Inland	CDH CDO LLC		24.8	%		—		—
Inland (2)	Concord Debt Holdings LLC		33.3	%		982		3,974
Inland (2)	CDH CDO LLC		24.8	%		4,181		322
Sealy (1)	Northwest Atlanta Partners LP		60.0	%		7,741		8,104
Sealy (1)	Newmarket GP LLC		68.0	%		—		—
Sealy (1)	Airpark Nashville GP		50.0	%		—		—
Marc Realty (1)	Brooks Building LLC		50.0	%		8,076		7,983
Marc Realty (1)	High Point Plaza LLC		50.0	%		2,137		2,241
Marc Realty (1)	1701 Woodfield LLC		50.0	%		2,052		1,977
Marc Realty (1)	Enterprise Center LLC		50.0	%		2,440		2,679
Marc Realty (1)	Atrium Mall LLC		50.0	%		3,904		—
ROIC	WRT-ROIC Lakeside Eagle LLC		50.0	%		3		—
New Valley/Starwood	Socal Office Portfolio Loan LLC		73.0	%		—		8
New Valley/Witkoff	701 7th WRT Investors LLC		70.6	%		36,989		28,735
Fenway	WRT-Fenway Wateridge LLC		50.0	%		1,816		1,522

					$	139,061	$	134,859

(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 economic performance of the VIEs.

(2)	Represents the interests acquired from Lexington Realty Trust on May 1, 2012.

The following table reflects the activity of the Trust’s equity investments for the period ended September 30, 2013 (in thousands):


Investment	Balance at December 31, 2012		Contributions		Equity Income (loss)			Distributions			Sales Price			Balance at September 30, 2013

Vintage Housing Holding LLC (2)	$	30,534	$	—	$	7,142		$	(3,970	)	$	—		$	33,706
WRT-Elad One South State Equity LP (2)		460		1,013		(1,473	)		—			—			—
WRT-Elad One South State Lender LP (2)		24,644		—		2,988			(3,114	)		—			24,518
WRT-Stamford LLC		8,501		—		701			(286	)		—			8,916
10 Metrotech LLC		10,845		—		3,284			(14,118	)		—			11
RE CDO Management LLC		1,779		—		3,710			(4,496	)		—			993
Mentor Retail LLC		551		—		45			—			—			596
Concord Debt Holdings LLC		—		—		3,041			(3,041	)		—			—
CDH CDO LLC		—		—		415			(402	)		(13	)		—
701 7th WRT Investors LLC (3)		28,735		7,745		2,375			(1,866	)		—			36,989
WRT-Fenway Wateridge LLC (2)		1,522		161		133			—			—			1,816
CDH CDO LLC (1)		322		—		4,274			(402	)		(13	)		4,181
Sealy		8,104		—		(363	)		—			—			7,741
Marc Realty		14,880		—		(17	)		(158	)					14,705
Atrium Mall LLC		—		3,935		(31	)		—			—			3,904
WRT-ROIC Lakeside Eagle LLC		—		25		(22	)		—			—			3
SoCal Office Portfolio Loan LLC		8		—		(2	)		(6	)		—			—
Concord Debt Holdings LLC (1)		3,974		—		49			(3,041	)		—			982

Total	$	134,859	$	12,879	$	26,249		$	(34,900	)	$	(26	)	$	139,061

(1)	Represents the interests acquired from Lexington Realty Trust on May 1, 2012.

(2)	The Trust has elected to report its share of earnings from the investment on a one month lag period.

(3)	The Trust has elected to report its share of earnings from the investment on a three month lag period.

The Trust has determined that the fair value of certain of its investments in the Marc Realty ventures and the Sealy Northwest Atlanta venture marginally exceed their carrying values. While the Sealy Northwest Atlanta venture continues to aggressively market available space for lease and work with existing tenants for lease renewal, which has resulted in an increase in occupancy from 70% at December 31, 2012 to 74% at September 30, 2013, declines in occupancy could cause impairment of this venture that could be material.

WRT-Elad - The Trust holds its mezzanine loan interest in Sullivan Center through WRT One South State Lender LP (“Lender LP”) and its profits participation interest through WRT-Elad One South State Equity LP (“Equity LP”). On February 18, 2013 a forbearance agreement was entered into whereby Lender LP agreed to forbear from exercising its rights under the loan documents with respect to the borrower’s failure to pay debt service for the period from December 2012 through October 2013. To the extent such debt service is not paid, debt service will accrue and be added to the outstanding principal balance of the mezzanine loan on each applicable monthly payment date. In exchange for the forbearance, Equity LP’s future interest in the property increased by 5% to 70%, with a corresponding decrease in the borrower’s general partner’s interest. In consideration for the forbearance the borrower is required to pay a $1,400,000 fee to Lender LP on or prior to November 9, 2013. If the $1,400,000 is not paid, in lieu of payment, then Equity LP’s indirect future interest in the property will increase by an additional 6% with a corresponding decrease to the general partner’s interest.

There is a basis differential of $10,465,000 between the Trust’s carrying value of its investments in Equity LP and the basis reflected at the joint venture level, which is amortized over the life of the related assets. The basis differential primarily relates to a bargain purchase gain recognized at the joint venture level upon acquisition.

Concord – On February 25, 2013 the Trust sold for $25,000 a 17% interest in the equity of CDH CDO LLC, exclusive of the interest in the entity that holds the collateral management agreement of CDH CDO, to Inland American. The sale of the interest was bifurcated between the Trust’s original interest and the interest acquired from Lexington Realty Trust with $12,500 of the sales price being allocated to each interest. The Trust recognized a gain of $12,500 on the sale of its original interest and a loss of $123,000 on the sale of its other interest. The sale of the interest did not affect the voting rights within CDH CDO LLC and did not result in a change in control. The Trust will continue to account for its investments in CDH CDO LLC under the equity method.

There is a basis differential on the Concord Debt Holdings and CDH CDO LLC interests acquired from Lexington of $5,440,000. This basis differential was a result of the purchase price exceeding the book basis at the venture level for the acquired interest.

RE CDO Management – On February 20, 2013 the venture sold its subordinated interests in Sorin CDO III for $2,750,000 and transferred the Sorin CDO III collateral management agreement for $0. On March 8, 2013 the venture sold its C Tranche subordinated interests in Sorin CDO IV for $6,240,000. As a result of the sales, the Trust received distributions of approximately $4,416,000 in the aggregate during the first quarter of 2013. The Trust’s share of the gain has been recorded as equity in earnings of this equity investment.

10 Metrotech Loan LLC – Equity Investment – On July 30, 2013 the $40,000,000 loan held by this venture was paid off at par. The venture, which had acquired the loan in August 2012 for $32,500,000, recognized $7,500,000 of discount accretion income in this current period in connection with the payoff at par. As a result of the payoff in July 2013, the Trust received a distribution from the venture of $13,333,000 and recorded equity income of $2,676,000 in connection with its 33.33% ownership interest in the venture. The venture level balance sheet consisted of total assets of $34,000 and $32,535,000 at September 30, 2013 and December 31, 2012, respectively and no liabilities at September 30, 2013 and December 31, 2012, respectively. The venture reported net income of $8,028,000 and $9,853,000 for the three and nine months ended September 30, 2013.

Sealy – On May 30, 2013 the Trust contributed its interest in Newmarket GP LLC and its interest in Airpark Nashville GP to WRT-TRS Management Corp its wholly owned taxable REIT subsidiary. The Trust’s carrying value of both investments was zero at the time of the contributions and the transaction had no effect on the financial statements of the Trust.

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 joint venture during the quarter ended June 30, 2013. The loan was in maturity default at the time of acquisition.

On July 26, 2013 the joint venture entered into an agreement with the borrower pursuant to which the borrower conveyed the leasehold interest to the venture in lieu of foreclosure. Accordingly, the venture now holds the leasehold interest in the property.

The summarized balance sheets of the Trust’s Vintage Housing Holding LLC venture is as follows (in thousands):


	September 30, 2013		December 31, 2012
ASSETS
Real estate, net	$	360,851	$	340,666
Cash and cash equivalents		5,469		6,555
Restricted cash held in escrows		45,380		41,878
Receivables and other assets		19,964		26,681

Total Assets	$	431,664	$	415,780


LIABILITIES AND MEMBERS’ CAPITAL
Mortgage and notes payable	$	313,078	$	298,654
Other liabilities		47,443		53,687
Non-controlling interests		18,006		15,997
Members’ Capital		53,137		47,442

Total Liabilities and Members’ Capital	$	431,664	$	415,780


Carrying value of the Trust’s investment in Vintage Housing Holding	$	33,706	$	30,534

The summarized statements of operations of the Trust’s Vintage Housing Holding LLC venture is as follows (in thousands):


	For the Three Months Ended September 30, 2013		For the Three Months Ended September 30, 2012		For the Nine Months Ended September 30, 2013		For the Nine Months Ended September 30, 2012

Total revenue	$	11,048	$	10,328	$	32,451	$	30,928

Expenses
Operating		4,649		4,254		13,952		12,250
Real estate taxes		128		139		397		442
Interest		485		1,503		1,480		4,824
Depreciation and amortization		446		978		1,137		6,605
Other expenses		1,453		1,323		4,176		4,048

Total expenses		7,161		8,197		21,142		28,169

Net income		3,887		2,131		11,309		2,759
Loss attributable to non-controlling interests		676		29		1,399		791

Net income attributable to VHH	$	4,563	$	2,160	$	12,708	$	3,550

Trust’s share of net income	$	2,525	$	1,392	$	7,142	$	2,326

The Trust records its investments in Vintage Housing Holding LLC on a one month lag, therefore amounts in the Trust’s financial statements for the period ended September 30, 2013 are based on balances and results from Vintage Housing Holding LLC for the period ended August 31, 2013.

The summarized balance sheets of the Trust’s CDH CDO LLC venture are as follows (in thousands):


	September 30, 2013		December 31, 2012
ASSETS
Cash and cash equivalents	$	2,031	$	1,885
Real estate debt investments carried at fair value		183,110		185,060
Securities carried at fair value		80,463		95,994
Real estate, net		—		19,909
Interest and other receivables		1,066		1,030
Other assets		319		3,893

Total Assets	$	266,989	$	307,771


LIABILITIES AND MEMBERS’ CAPITAL
Collateralized debt obligation carried at fair value		153,361		191,345
Mortgage note payable		—		22,293
Interest rate swap liability		8,270		11,413
Other liabilities		2,727		5,423
Non-controlling interests		102		102
Members’ Capital		102,529		77,195

Total Liabilities and Members’ Capital	$	266,989	$	307,771


Carrying value of the Trust’s investments in CDH CDO LLC	$	4,181	$	322

The summarized statement of operations of the Trust’s CDH CDO LLC venture is as follows (in thousands):


	For the Three Months Ended September 30, 2013			For the Three Months Ended September 30, 2012			For the Nine Months Ended September 30, 2013			For the Nine Months Ended September 30, 2012
Interest, dividends and discount accretion	$	4,469		$	4,688		$	12,654		$	13,362
Expenses
Interest expense		1,598			1,651			4,791			5,012
Fees and expenses paid to related party		250			250			750			750
General and administrative		328			304			891			964

Total expenses		2,176			2,205			6,432			6,726


Net investment income:		2,293			2,483			6,222			6,636
Net property income		(55	)		(5	)		(205	)		(282	)
Loss on sale of real estate		(2,909	)		—			(2,909	)		—
Gain on extinguishment of debt		4,827			—			4,827			—
Realized gain (loss) from investments		13,367			1,716			13,361			(1,042	)
Unrealized gain (loss) from investments		391			620			5,886			7,436


Net income		17,914			4,814			27,182			12,748


Trust’s share of net income	$	3,367		$	855		$	4,274		$	1,333