9.	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, 2015 and December 31, 2014:


Venture Partner	Equity Investment	Nominal % Ownership at December 31, 2015			Nominal % Ownership at December 31, 2014
Elad Canada Ltd	WRT One South State Lender LP		50.0	%		50.0	%
Elad Canada Ltd	WRT-Elad One South State Equity LP		50.0	%		50.0	%
Atrium Holding	RE CDO Management LLC		50.0	%		50.0	%
Freed	Mentor Retail LLC		49.9	%		49.9	%
Inland	Concord Debt Holdings LLC		66.6	%		66.6	%
Inland	CDH CDO LLC		49.6	%		49.6	%
Marc Realty	Atrium Mall LLC		50.0	%		50.0	%
New Valley/Witkoff (1)	701 Seventh WRT Investor LLC		81.0	%		81.0	%
RS Summit Pointe (2)	RS Summit Pointe Apartments LLC		80.0	%		80.0	%
Serure/C&B High Line (3)	446 High Line LLC		83.6	%		N/A
Freed (4)	Edens Plaza Associates LLC		N/A			<1	%
Freed (2)(4)	Irving-Harlem Venture Limited		N/A			<1	%
Gancar Trust (4)	Vintage Housing Holdings LLC		N/A			75.0	%

(1)	The Trust’s investment in this venture provides the Trust with a 61.14% effective ownership interest in the underlying property.

(2)	Investment was previously consolidated under going concern accounting. See Note 3 “Post Plan of Liquidation” for further discussion.

(3)

Investment was reclassified as an equity investment as of December 31, 2015 due to a change in exit strategy. The investment was consolidated in previous filings. The nominal ownership percentage is based on the waterfall provision of the partnership. See Note 3 “Post Plan of Liquidation” for further discussion.

(4)	The Trust’s investment was sold or fully redeemed during the year ended December 31, 2015.

See Note 7 – Investment and Disposition Activities for information relating to 2015 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 Statements 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:


	Year(s) Determined
Entity	Significant		Exhibit
CDH CDO LLC		2013		99.1
Vintage Housing Holdings LLC		2013		99.2
701 Seventh WRT Investor LLC and subsidiaries		2015, 2013		—

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 CDH CDO LLC and Vintage Housing Holdings LLC are attached to this Form 10-K. Audited financial statements for the years ended December 31, 2015 and 2013 for 701 Seventh WRT Investor LLC will be filed as an amendment 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.


	Year Ended December 31,
	2015			2014		2013
Income Statements
Rental Revenue	$	70,705		$	94,432	$	85,660
Interest, dividends and discount accretion	$	6,874		$	14,017	$	40,229
Expenses	$	78,165		$	98,107	$	93,344
Other loss	$	747		$	5,297	$	23,188
Income (loss) from continuing operations	$	(1,333	)	$	5,045	$	9,357


	December 31, 2015		December 31, 2014
Balance Sheets
Investment in real estate	$	876,400	$	1,251,615
Total assets	$	954,374	$	1,453,983
Total debt	$	693,013	$	913,406
Total liabilities	$	40,943	$	179,224
Non controlling interests	$	52,052	$	88,363

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 WRT One South State Lender LP (“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 9 and non-recurring income recorded by Lender LP in 2013.

Lender LP holds a single loan receivable with a face amount of $55,714,000 at December 31, 2015. 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,
	2015		2014
Assets
Loan receivable	$	50,109	$	44,014
Other assets, net		6,110		5,446

Total assets	$	56,219	$	49,460

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

Total liabilities		2		2

Equity		56,217		49,458

Total liabilities and equity	$	56,219	$	49,460

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


	Year Ended December 31,
	2015		2014		2013
Revenue
Interest income	$	10,400	$	10,123	$	8,506
Management fee income		—		—		—

		10,400		10,123		8,506
Expenses
General and administrative		—		—		86
Other expenses		—		—		—

		—		—		86

Net income	$	10,400	$	10,123	$	8,420

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


	2015			2014			2013
Net cash provided by operating activities	$	7,639		$	7,865		$	879
Net cash used in investing activities	$	(3,998	)	$	—		$	—
Net cash used in financing activities	$	(3,641	)	$	(7,865	)	$	(5,952	)
Cash and cash equivalents, end of year	$	—		$	—		$	—
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 9 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 $76,733,000 at December 31, 2015, 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 $47,515,000 at December 31, 2015. 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,
	2015		2014
Assets
Loan receivable	$	965	$	1,002
Other assets, net		825		869

Total assets	$	1,790	$	1,871

Liabilities and equity
Accounts payable and accrued expenses	$	8	$	12

Total liabilities		8		12

Equity		1,782		1,859

Total liabilities and equity	$	1,790	$	1,871

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


	Year Ended December 31,
	2015		2014		2013
Revenue
Management fee income	$	113	$	149	$	226

		113		149		226

Expenses
General and administrative		58		79		290
Other expenses		48		51		1,459

		106		130		1,749

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

Net income	$	7	$	19	$	7,417

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


	Year Ended December 31,
	2015			2014			2013
Net cash provided by (used in) operating activities	$	97		$	104		$	(7	)
Net cash provided by investing activities	$	—		$	—		$	8,940
Net cash used in financing activities	$	(84	)	$	(141	)	$	(8,993	)
Cash and cash equivalents, end of year	$	39		$	26		$	63