11.

Equity Investments

Under liquidation accounting, equity investments are carried at net realizable value. The Trust’s nominal ownership percentages in its equity investments consist of the following at December 31, 2014 and December 31, 2013:


Venture Partner	Equity Investment	Nominal % Ownership at December 31, 2014			Nominal % Ownership at December 31, 2013
Gancar Trust (1)	Vintage Housing Holdings LLC		75.0	%		75.0	%
Elad Canada Ltd	WRT One South State Lender LP		50.0	%		50.0	%
Elad Canada Ltd	WRT-Elad One South State		50.0	%		50.0	%
	Equity LP
Atrium Holding	RE CDO Management LLC		50.0	%		50.0	%
Freed	Mentor Retail LLC		49.9	%		49.9	%
Inland/Lexington	Concord Debt Holdings LLC		33.3	%		33.3	%
Inland/Lexington	CDH CDO LLC		24.8	%		24.8	%
Inland (2)	Concord Debt Holdings LLC		33.3	%		33.3	%
Inland (2)	CDH CDO LLC		24.8	%		24.8	%
Marc Realty (1)	Atrium Mall LLC		50.0	%		50.0	%
New Valley/Witkoff	701 Seventh WRT Investor LLC		81.0	%		70.5	%
RS Summit Pointe (4)	RS Summit Pointe Apartments LLC		80.0	%		N/A
Freed	Edens Plaza Associates LLC		<1	%		N/A
Freed (4)	Irving-Harlem Venture Limited		<1	%		N/A
Sealy (1) (3)	Northwest Atlanta Partners LP		N/A			60.0	%
Mack-Cali (3)	WRT-Stamford LLC		N/A			20.0	%
Atrium/Northstar (3)	10 Metrotech Loan LLC		N/A			33.3	%
Marc Realty (1) (3)	Brooks Building LLC		N/A			50.0	%
Marc Realty (1) (3)	High Point Plaza LLC		N/A			50.0	%
Marc Realty (1) (3)	1701 Woodfield LLC		N/A			50.0	%
Marc Realty (1) (3)	Enterprise Center LLC		N/A			50.0	%
ROIC (3)	WRT-ROIC Lakeside Eagle LLC		N/A			50.0	%
Fenway (3)	WRT-Fenway Wateridge LLC		N/A			50.0	%

(1)

The Trust has determined that these equity investments were investments in VIEs. Under going concern accounting, the Trust determined that it was not the primary beneficiary of these VIEs since the Trust did not have the power to direct the activities that most significantly impact the VIEs economic performance.

(2)

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

(3)

The Trust’s investment was sold or fully redeemed during the year ended December 31, 2014.

(4)

Investment was previously consolidated under going concern accounting. See Note 2 “Liquidation Basis of Accounting” for further discussion.

See Note 7 – Acquisition and Disposition Activities for information relating to 2014 activity with respect to equity investments.

At December 31, 2014 there is a basis differential for each investment between the Trust’s carrying value of its investments and the basis reflected at the joint venture’s level. The basis differential primarily relates to the difference between the net realizable value of the investment and the inside basis of the Trust’s equity in the joint venture. The basis differential is accounted for in the Trust’s calculation of the net realizable value.

Equity Investment Impairments

During the fourth quarter of 2013, the Trust’s equity investments in the Brooks Building, LLC (“223 West Jackson”), High Point Plaza, LLC (“High Point”), 1701 Woodfield, LLC (“1701 Woodfield”), and Enterprise Center, LLC (individually “Enterprise” and the aforementioned investments collectively the “Marc Investments”) suffered declines in occupancy, increasing competition for tenants, and increasing costs to operate the investments. Additionally, recent discussions related to marketing available space to potential tenants, along with lease renewals with existing tenants, indicated a capital infusion from the Trust would be necessary to upgrade the investments to achieve rental rates in-line with the suburban Chicago, Illinois office market. The factors above along with increasing capital demands and rising cost of capital caused the Trust to reassess its business plan associated with the Marc Investments in the fourth quarter of 2013.

Subsequent to December 31, 2013 the Trust entered into an agreement with Marc Realty, its joint venture partner in these equity investments, to sell its interests in High Point, 1701 Woodfield, Enterprise Center along with its controlling interest in the River City property, located in Chicago, Illinois, which is consolidated, for a gross sales price of $6,000,000. The Trust considered the underlying investment characteristics and negotiations with Marc Realty in allocating the purchase price to the specific assets included in the transaction. Additionally, the Trust granted Marc Realty an option exercisable within two years to acquire its interest in 223 West Jackson.

Based on the factors noted above, the Trust concluded that each of the Marc Investments were other-than-temporarily impaired in the aggregate by $7,687,000 at December 31, 2013, when comparing each of their carrying values of $14,438,000 in the aggregate to each of their fair values of $6,751,000 in the aggregate and a corresponding impairment charge has been included in equity in income (loss) of equity investments in the Consolidated Statement of Operations and Comprehensive Income for the year then ended. The Trust separately tested the River City property for impairment and determined that the carrying value of River City was recoverable at December 31, 2013 when comparing the portion of the gross sales price attributable to the River City property to its carrying value.

During June 2014 the Trust was notified by Marc Realty of its intention to exercise its option to acquire the Trust’s interest in 223 West Jackson prior to year end. The purchase price of the Trust’s interest was dependent upon when the option was exercised and certain operating characteristics of the investment at the time of exercise. The Trust considered a probability analysis of various scenarios based on the notification of exercise and the Trust concluded that the carrying value of this investment exceeded its fair value. As a result, the Trust recorded an other-than-temporary impairment charge of $762,000 at June 30, 2014.

During the second quarter of 2014, the Trust, together with Sealy its venture partner in Northwest Atlanta Partners LP, agreed to market for sale the property held by the venture. In preparation for marketing the property, the venture obtained multiple third party valuations to provide a range of residual values. The fair value of the Trust’s equity investment in Northwest Atlanta Partners LP was calculated using the following weighted average key Level 3 inputs: discount rate of 10.8%, terminal capitalization rate of 8.5%, market rent growth rate of 2.7% and expense growth rates of 2.8%. The Trust concluded that the carrying value of this investment exceeded its current fair value and the Trust recorded an other-than-temporary impairment charge of $1,660,000 at June 30, 2014.

Separate Financial Statements for Unconsolidated Subsidiaries

The Trust has determined that for the periods presented in the Trust’s financial statements, certain of its unconsolidated subsidiaries have met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for which the Trust is required, pursuant to Rule 3-09 of Regulation S-X, to attach separate financial statements as exhibits to its Annual Report on Form 10-K as follows:


Entity	Year(s) Determined Significant		Exhibit
CDH CDO LLC		2013		99.1
Vintage Housing Holdings LLC		2013		99.2
701 Seventh WRT Investor LLC and subsidiaries		2013		99.3

The Trust was granted a waiver of the requirements to provide comparable unaudited Regulation S-X 3-09 financial statements for the year ended December 31, 2014 for its equity method joint venture investees CDH CDO LLC, Vintage Housing Holdings LLC and 701 Seventh WRT Investor LLC by the U.S. Securities and Exchange Commission. Audited financial statements for the year ended December 31, 2013 for these investees are attached to this Form 10-K.

Combined Financial Statements for Unconsolidated Subsidiaries

Pursuant to Rule 4-08(g), the following summarized financial data for unconsolidated subsidiaries includes information for the following entities: Vintage Housing Holdings, LLC, WRT-Elad One South State Equity LP, WRT-Stamford LLC, 10 Metrotech Loan LLC, Mentor Retail LLC, 701 Seventh WRT Investor LLC, WRT-Fenway Wateridge LLC, Brooks Building LLC, High Point Plaza LLC, 1701 Woodfield LLC, Enterprise Center LLC, Atrium Mall LLC, Edens Plaza Associates LLC, Northwest Atlanta Partners LP, Concord Debt Holdings LLC, CDH CDO LLC and WRT-ROIC Lakeside Eagle LLC.


	For the Year Ended December 31, 2014		For the Year Ended December 31, 2013		For the Year Ended December 31, 2012
Income Statements
Rental Revenue		94,432		85,660		73,861
Interest, dividends and discount accretion		14,017		40,229		28,041
Expenses		98,107		93,344		89,883
Other loss		5,297		23,188		6,158
Income from continuing operations		5,045		9,357		5,861


	As of December 31, 2014		As of December 31, 2013
Balance Sheets
Investment in real estate		1,251,615		1,291,651
Total assets		1,453,983		1,504,548

Total debt		913,406		896,094
Total liabilities		179,224		270,109
Non controlling interests		88,363		43,660

The Trust had elected a one-month lag reporting period for Vintage Housing Holdings LLC, WRT-Elad One South State Equity LP and WRT-Fenway Wateridge LLC. The Trust had elected a three-month lag reporting period for 701 Seventh WRT Investor LLC.

The Trust was granted a waiver of the requirements to provide Regulation S-X 3-09 financial statements for its equity method joint venture investee Lender LP by the U.S. Securities and Exchange Commission. Lender LP met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for 2013 solely due to impairment charges recorded on other equity investments as discussed in this Note 11 and non-recurring income recorded by Lender LP in 2013.

Lender LP holds a single loan receivable with a face amount of $51,716,000 at December 31, 2014. The loan bears interest at a rate of 15% per annum, requires payments of interest only and matures December 2017. The loan was acquired at a discount to face and the discount is being accreted into income over the life of the loan.

The balance sheets of Lender LP, on a going concern basis, are as follows (in thousands):


	December 31,
	2014		2013
Assets
Loan receivable	$	44,014	$	42,173
Other assets, net		5,446		5,028

Total assets	$	49,460	$	47,201

Liabilities and Equity
Accounts payable and accrued expenses	$	2	$	23
Other liabilities		—		—

Total liabilities	$	2	$	23

Equity		49,458		47,178

Total liabilities and equity	$	49,460	$	47,201

The statements of operations for Lender LP , on a going concern basis, are as follows (in thousands):


	Year Ended December 31,
	2014		2013		2012
Revenue
Interest income	$	10,123	$	8,506	$	7,378
Management fee income		—		—		—

		10,123		8,506		7,378
Expenses
General and administrative		—		86		127
Other expenses		—		—		—

		—		86		127
Other income and expense
Other income		—		—		—

Net income	$	10,123	$	8,420	$	7,251

Statement of cash flows for Lender LP are as follows (in thousands):


	Year Ended December 31,
	2014			2013			2012
Net cash provided by (used in) operating activities	$	7,865		$	879		$	4,967
Net cash provided by (used in) investment	$	—		$	—		$	(21,369	)
Net cash provided by (used in) financing activities	$	(7,865	)	$	(5,952	)	$	21,475
Cash and cash equivalents, end of year	$	—		$	—		$	5,073
Non cash investing and financing activity
Distribution to partners	$	—		$	(4,166	)	$	—
Contribution from partners	$	20		$	—		$	—

The Trust was granted a waiver of the requirements to provide Regulation S-X 3-09 financial statements for its equity method joint venture investee RE CDO Management LLC (“RE CDO”) by the U.S. Securities and Exchange Commission. RE CDO met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for 2013 solely due to impairment charges recorded on other equity investments as discussed in this Note 11 and non-recurring income recorded by RE CDO in 2013.

RE CDO holds a 5.52% interest in (i) a first priority mortgage loan collateralized by land located in Las Vegas, Nevada (the “LV Land”), which loan bears interest at LIBOR plus 40% with a current pay rate of 7.5% and the balance accruing and compounding and which had an outstanding balance of $50,113,000 at December 31, 2014, and (ii) a second priority mortgage loan collateralized by the LV Land which bears interest at 10% per annum, all of which accrues, and which had an outstanding balance of $43,097,000 at December 31, 2014. The interest in the loan was acquired for $1,093,000 and RE CDO accounts for this investment on the cost recovery method.

RE CDO also holds the collateral management agreement for a collateralized debt obligation entity that holds loans and loan securities.

The balance sheets of RE CDO, on a going concern basis, are as follows (in thousands):


	December 31,
	2014		2013
Assets
Loan receivable	$	1,002	$	1,033
Other assets, net		869		965

Total assets	$	1,871	$	1,998

Liabilities and equity
Accounts payable and accrued expenses	$	12	$	16

Total liabilities		12		16

Equity		1,859		1,982

Total liabilities and equity	$	1,871	$	1,998

The statements of operations for RE CDO, on a going concern basis, are as follows (in thousands):


	Year Ended December 31,
	2014		2013		2012
Revenue
Management fee income	$	149	$	226	$	618

		149		226		618

Expenses
General and administrative		79		290		354
Other expenses		51		1,459		129

		130		1,749		483

Other income and expense Gain on sale of assets		—		8,940		—

Net income	$	19	$	7,417	$	135

Statement of cash flows for RE CDO are as follows (in thousands):


	Year Ended December, 31,
	2014			2013			2012
Net cash provided by (used in) operating activities	$	104		$	(7	)	$	292
Net cash provided by (used in) investment	$	—		$	8,940		$	(1,093	)
Net cash provided by (used in) financing activities	$	(141	)	$	(8,993	)	$	830
Cash and cash equivalents, end of year	$	26		$	63		$	123

The Trust was granted a waiver of the requirements to provide Regulation S-X 3-09 financial statements for its equity method joint venture investee SoCal by the U.S. Securities and Exchange Commission. SoCal met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X for 2012 solely due to the early payoff of its sole investment in a loan asset. The proceeds from the loan payoff have been distributed, and SoCal was dissolved in 2013.

The statements of operations for SoCal are as follows (in thousands):


	For the Year Ended December 31, 2012
Interest, dividends and discount accretion	$	25,122

Expenses
Interest		7,794
General and administrative		424
Other expenses		12

Total expenses		8,230

Net income	$	16,892

Trust’s share of net income	$	9,706