Winthrop Realty Liquidating Trust - FORM 10-Q

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file	filename
EX-32.1 - EX-32.1 - Winthrop Realty Liquidating Trust	d86799dex321.htm
EX-31.1 - EX-31.1 - Winthrop Realty Liquidating Trust	d86799dex311.htm
EX-31.2 - EX-31.2 - Winthrop Realty Liquidating Trust	d86799dex312.htm
EX-32.2 - EX-32.2 - Winthrop Realty Liquidating Trust	d86799dex322.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: September 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-6249

WINTHROP REALTY TRUST

(Exact name of Registrant as specified in its certificate of incorporation)


Ohio		34-6513657
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

7 Bulfinch Place, Suite 500, Boston, Massachusetts		02114
(Address of principal executive offices)		(Zip Code)

(617) 570-4614

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule12b-2). Yes ¨ No x

As of November 1, 2015 there were 36,425,084 Common Shares of Beneficial Interest outstanding.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(unaudited)

INDEX


		Page
Part I.	Financial Information

Item 1.	Financial Statements (Unaudited):

	Consolidated Statements of Net Assets (Liquidation Basis) as of September 30, 2015 and December 31, 2014		3

	Consolidated Statements of Changes in Net Assets (Liquidation Basis) for the Nine Months Ended September 30, 2015 and for the period from August 1, 2014 through September 30, 2014		4

	Consolidated Statements of Operations and Comprehensive Income (Going Concern Basis) for the One and Seven Months Ended July 31, 2014		5

	Consolidated Statement of Equity (Going Concern Basis) for the Seven Months Ended July 31, 2014		6

	Consolidated Statement of Cash Flows (Going Concern Basis) for the Seven Months Ended July 31, 2014		7

	Notes to Consolidated Financial Statements		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23

Item 3.	Quantitative and Qualitative Disclosure about Market Risk		29

Item 4.	Controls and Procedures		31

Part II.	Other Information

Item 6.	Exhibits		32

Signatures			33

Exhibit Index			34

Part I.

Financial Information

Item 1.

Financial Statements (Unaudited)

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

CONSOLIDATED STATEMENTS OF NET ASSETS

(Liquidation Basis)

(unaudited, in thousands)


	September 30, 2015		December 31, 2014

ASSETS
Investments in real estate	$	480,898	$	557,325
Equity investments		280,617		389,921
Cash and cash equivalents		56,716		127,583
Restricted cash held in escrows		8,269		5,831
Loans receivable		8,386		24,005
Secured financing receivable		29,197		29,210
Accounts receivable		1,327		1,468
Loan securities		—		918

TOTAL ASSETS		865,410		1,136,261

LIABILITIES
Mortgage loans payable		223,174		296,954
Senior notes payable		—		71,265
Liability for non-controlling interests		45,886		46,564
Liability for estimated costs in excess of estimated receipts during liquidation		30,881		31,253
Dividends payable		1,550		82,353
Accounts payable, accrued liabilities and other liabilities		9,490		10,794
Related party fees payable		1,837		2,374

TOTAL LIABILITIES		312,818		541,557


COMMITMENTS AND CONTINGENCIES (Note 12)
Net assets in liquidation	$	552,592	$	594,704

See Notes to Consolidated Financial Statements.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Liquidation Basis)

(unaudited, in thousands)


	Nine Months Ended September 30, 2015			Period from August 1, 2014 through September 30, 2014

Net assets in liquidation, beginning of period	$	594,704		$	786,915
Changes in net assets in liquidation
Change in liquidation value of investments in real estate		4,723			(1,250	)
Change in liquidation value of loans receivable		—			4,750
Change in liquidation value of loan securities		(918	)		—
Change in liquidation value of equity investments		499			—
Remeasurement of assets and liabilities		(1,285	)		(231	)
Remeasurement of non-controlling interests		400			—

Net increase in liquidation value		3,419			3,269
Liquidating distributions to Series D Preferred Shareholders		—			(121,890	)
Liquidating distributions to holders of Common Shares		(45,531	)		—

Changes in net assets in liquidation		(42,112	)		(118,621	)

Net assets in liquidation, end of period	$	552,592		$	668,294

See Notes to Consolidated Financial Statements.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Going Concern Basis)

(unaudited, in thousands, except per share data)


	One Month Ended July 31, 2014			Seven Months Ended July 31, 2014
Revenue
Rents and reimbursements	$	7,085		$	46,313
Interest and discount accretion		1,394			9,643

		8,479			55,956

Expenses
Property operating		2,546			17,127
Real estate taxes		764			5,379
Depreciation and amortization		2,074			15,957
Interest		1,870			13,394
Impairment loss on investments in real estate		—			9,200
General and administrative		497			4,283
Related party fees		774			5,548
Transaction costs		17			586
Federal, state and local taxes		(165	)		(60	)

		8,377			71,414

Other income (loss)
Equity in income of equity investments		2,250			12,622
Earnings from preferred equity investments		11			582
Loss of extinguishment of debt, net		—			(564	)
Realized gain on sale of securities carried at fair value		—			2
Interest and other income		37			244

		2,298			12,886

Income (loss) from continuing operations		2,400			(2,572	)
Discontinued operations
Income from discontinued operations		84			11,235

Net income		2,484			8,663
Net loss attributable to non-controlling interests		395			3,818

Net income attributable to Winthrop Realty Trust		2,879			12,481
Preferred dividend of Series D Preferred Shares		(929	)		(6,502	)
Amount allocated to Restricted Common Shares		(11	)		(192	)

Net income attributable to Common Shares	$	1,939		$	5,787

Per Common Share data - Basic
Income (loss) from continuing operations	$	0.05		$	(0.15	)
Income from discontinued operations		—			0.31

Net income attributable to Common Shares	$	0.05		$	0.16

Per Common Share data - Diluted
Income (loss) from continuing operations	$	0.05		$	(0.15	)
Income from discontinued operations		—			0.31

Net income attributable to Common Shares	$	0.05		$	0.16


Basic Weighted-Average Common Shares		35,825			35,821

Diluted Weighted-Average Common Shares		35,975			35,821

Comprehensive income
Net income	$	2,484		$	8,663
Change in unrealized gain (loss) on interest rate derivative		445			(193	)

Consolidated comprehensive income		2,929			8,470

Net loss attributable to non-controlling interests		395			3,818

Comprehensive loss attributable to non-controlling interests		395			3,818

Comprehensive income attributable to Winthrop Realty Trust	$	3,324		$	12,288

See Notes to Consolidated Financial Statements.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

CONSOLIDATED STATEMENT OF EQUITY

(Going Concern Basis)

(unaudited, in thousands)


	Series D Preferred Shares of Beneficial Interest				Common Shares of Beneficial Interest				Additional Paid-In Capital		Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (loss)			Non- Controlling Interests
	Shares		Amount		Shares		Amount		Additional Paid-In Capital		Accumulated Distributions in Excess of Net Income			Accumulated Other Comprehensive Income (loss)			Non- Controlling Interests			Total

Balance, December 31, 2013		4,820	$	120,500		36,401	$	35,809	$	647,121	$	(322,432	)	$	(124	)	$	28,789		$	509,663

Net income attributable to Winthrop Realty Trust		—		—		—		—		—		12,481			—			—			12,481
Net loss attributable to non-controlling interests		—		—		—		—		—		—			—			(3,818	)		(3,818	)
Distributions to non-controlling interests		—		—		—		—		—		—			—			(711	)		(711	)
Contributions from non-controlling interests		—		—		—		—		—		—			—			873			873
Increase in non-controlling interest due to consolidation of property		—		—		—		—		—		—			—			16,391			16,391
Decrease in non-controlling interest due to property sale		—		—		—		—		—		—			—			(3,764	)		(3,764	)
Dividends declared on Common Shares of Beneficial Interest ($0.325 per share)		—		—		—		—		—		(11,642	)		—			—			(11,642	)
Dividends declared on Series D Preferred Shares ($1.348963 per share)		—		—		—		—		—		(6,502	)		—			—			(6,502	)
Dividends declared on Restricted Shares		—		—		—		—		—		(192	)		—			—			(192	)
Change in unrealized loss on interest rate derivatives		—		—		—		—		—		—			(193	)		—			(193	)
Stock issued pursuant to Dividend Reinvestment Plan		—		—		16		16		162		—			—			—			178
Amortization of Restricted Shares		—		—		—		—		1,450		—			—			—			1,450

Balance, July 31, 2014		4,820	$	120,500		36,417	$	35,825	$	648,733	$	(328,287	)	$	(317	)	$	37,760		$	514,214

See Notes to Consolidated Financial Statements.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

(Going Concern Basis)

(unaudited, in thousands)


	Seven Months Ended July 31, 2014
Cash flows from operating activities
Net income	$	8,663
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of deferred financing costs and fair value of debt)		11,331
Amortization of lease intangibles		6,462
Straight-line rental income		1,121
Loan discount accretion		(2,086	)
Discount accretion received in cash		5,865
Earnings of preferred equity investments		(582	)
Distributions of income from preferred equity investments		565
Income of equity investments		(12,622	)
Distributions of income from equity investments		8,755
Restricted cash held in escrows		(27	)
Gain on sale of securities carried at fair value		(2	)
Gain on sale of real estate investments		(11,073	)
Impairment loss on investments in real estate		9,287
Tenant leasing costs		(1,046	)
Equity compensation expenses		1,450
Bad debt recovery		(229	)
Changes in assets and liabilities:
Interest receivable		(64	)
Accounts receivable and other assets		665
Accounts payable, accrued liabilities and other liabilities		(8,234	)

Net cash provided by operating activities		18,199

Cash flows from investing activities
Issuance and acquisition of loans receivable		(31,492	)
Investments in real estate		(5,575	)
Investment in equity investments		(48,154	)
Proceeds from sale of investments in real estate		56,423
Proceeds from sale of equity investments		200
Return of capital distribution from equity investments		705
Return of capital distribution from preferred equity investments		643
Purchase of securities carried at fair value		(73	)
Proceeds from sale of securities carried at fair value		75
Proceeds from payoff of loan securities
Restricted cash held in escrows		2,127
Collection of loans receivable		7,784
Proceeds from sale of loans receivable		37,052
Cash from consolidation of properties		332

Net cash provided by investing activities		20,047

(continued on next page)

See Notes to Consolidated Financial Statements.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

(Going Concern Basis)

(unaudited, in thousands)


	Seven Months Ended July 31, 2014
Cash flows from financing activities
Principal payments of mortgage loans payable	$	(5,412	)
Repurchase of senior notes payable		(11,178	)
Restricted cash held in escrows		(239	)
Deferred financing costs		(68	)
Contribution from non-controlling interest		873
Distribution to non-controlling interest		(711	)
Proceeds from issuance of Common Shares under Dividend Reinvestment Plan		178
Dividend paid on Common Shares		(17,461	)
Dividend paid on Series D Preferred Shares		(5,573	)
Dividend paid on Restricted Shares		(71	)

Net cash used in financing activities		(39,662	)

Net decrease in cash and cash equivalents		(1,416	)
Cash and cash equivalents at beginning of period		112,512

Cash and cash equivalents at end of period	$	111,096

Supplemental Disclosure of Cash Flow Information

Interest paid	$	15,280

Capitalized interest	$	2,457

Taxes paid	$	147


Supplemental Disclosure on Non-Cash Investing and Financing Activities
Dividends accrued on Common Shares and Restricted Shares	$	401

Dividends accrued on Series D Preferred Shares	$	929

Capital expenditures accrued	$	1,736

Conveyance of secured financing in settlement of loans receivable	$	(29,150	)

Forgiveness of loan receivable	$	190

Fair value of assets acquired	$	69,140

Fair value of liabilities assumed	$	52,687

Contribution to Vintage Housing Holdings LLC	$	450

See Notes to Consolidated Financial Statements.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

1.	Organization

Winthrop Realty Trust (“Winthrop”), a real estate investment trust (“REIT”) under Sections 856-860 of the Internal Revenue Code, is an unincorporated association in the form of a business trust organized in Ohio under a Declaration of Trust dated August 1, 1961, as amended and restated on May 21, 2009, which has as its stated principal business activity the ownership and management of, and lending to, real estate and related investments.

Winthrop conducts its business through WRT Realty L.P., a Delaware limited partnership (the “Operating Partnership”). Winthrop is the sole general partner of, and owns directly and indirectly, 100% of the limited partnership interest in the Operating Partnership. All references to the “Trust” refer to Winthrop and its consolidated subsidiaries, including the Operating Partnership.

On April 28, 2014 the Trust’s Board of Trustees (the “Board”) adopted a plan of liquidation which was subject to approval by the holders of a majority of the Trust’s common shares of beneficial interest (“Common Shares”). The plan was approved at a special meeting of shareholders on August 5, 2014 and the Trust adopted the liquidation basis of accounting as of August 1, 2014.

Prior to the plan of liquidation, the Trust was engaged in the business of owning real property and real estate related assets which it categorized into three segments: (i) ownership of investment properties including wholly owned properties and investments in joint ventures which own investment properties (“operating properties”); (ii) origination and acquisition of loans collateralized directly or indirectly by commercial and multi-family real property, (collectively “loan assets”); and (iii) equity and debt interests in other real estate investment trusts (“REIT securities”). Subsequent to the adoption of the plan of liquidation discussed below, the Trust no longer makes operating decisions or assesses performance in separate segments. Accordingly, the Trust has only one reporting and operating segment subsequent to July 31, 2014.

2.	Plan of Liquidation

The plan of liquidation provides for an orderly sale of the Trust’s assets, payment of the Trust’s liabilities and other obligations and the winding up of operations and dissolution of the Trust. The Trust is not permitted to make any new investments other than protective acquisitions or advances with respect to the Trust’s existing assets. The Trust is permitted to satisfy any existing contractual obligations including any capital call requirements and acquisitions or dispositions pursuant to buy-sell provisions under existing joint venture documentation, pay for required tenant improvements and capital expenditures at its real estate properties, and repurchase its existing Common Shares. The Trust is also permitted to invest its cash reserves in short-term U.S. Treasuries or other short-term obligations.

The plan of liquidation enables the Trust to sell any and all of its assets without further approval of the shareholders and provides that liquidating distributions be made to the shareholders as determined by the Board. Pursuant to applicable REIT rules, in order to be able to deduct liquidating distributions as dividends, the Trust must complete the disposition of its assets by August 5, 2016, two years after the date the plan of liquidation was adopted by shareholders. To the extent that all of the Trust’s assets are not sold by such date, the Trust intends to satisfy this requirement by distributing its unsold assets into a liquidating trust at the end of such two-year period, and the holders of interests in the Trust at such time will be beneficiaries of such liquidating trust. Interests in the liquidating trust will not be registered and will not be freely transferable.

The dissolution process and the amount and timing of distributions to shareholders involves risks and uncertainties. Accordingly, it is not possible to predict the timing or aggregate amount which will ultimately be distributed to shareholders and no assurance can be given that the distributions will equal or exceed the estimate of net assets presented in the Consolidated Statements of Net Assets.

The Trust expects to continue to qualify as a REIT throughout the liquidation until such time as any remaining assets, if any, are transferred into a liquidating trust. The Board shall use commercially reasonable efforts to continue to cause the Trust to maintain its REIT status, provided however, the Board may elect to terminate the Trust’s status as a REIT if it determines that such termination would be in the best interest of the shareholders.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

3.	Summary of Significant Accounting Policies

Basis of Presentation

Pre Plan of Liquidation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, although management believes that the disclosures presented herein are adequate to make the accompanying unaudited consolidated interim financial statements not misleading. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated annual financial statements and the notes thereto included in Winthrop’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC. In the opinion of management, all adjustments considered necessary for fair statements have been included, and all such adjustments were of a normal recurring nature. The results of operations for the interim periods were not necessarily indicative of the operating results for the full year.

The accompanying unaudited consolidated interim financial statements represent the consolidated results of Winthrop, its wholly-owned taxable REIT subsidiary, WRT-TRS Management Corp., the Operating Partnership and all majority-owned subsidiaries and affiliates over which the Trust has financial and operating control and variable interest entities (“VIE”s) in which the Trust has determined it is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. Prior to the adoption of the plan of liquidation, the Trust accounted for all other unconsolidated joint ventures using the equity method of accounting. Accordingly, the Trust’s share of the earnings of these joint ventures and companies was included in consolidated net income.

The consolidated financial statements for the periods ended July 31, 2014 were prepared on the going concern basis of accounting, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Post Plan of Liquidation

Liquidation Basis of Accounting

As a result of the approval of the plan of liquidation by the shareholders, the Trust has adopted the liquidation basis of accounting as of August 1, 2014 and for the periods subsequent to August 1, 2014 in accordance with GAAP. Accordingly, on August 1, 2014 assets were adjusted to their estimated net realizable value, or liquidation value, which represents the estimated amount of cash that the Trust will collect on disposal of assets as it carries out its plan of liquidation. The liquidation value of the Trust’s operating properties and loan assets are presented on an undiscounted basis. Estimated costs to dispose of assets have been presented separately from the related assets. Liabilities are carried at their contractual amounts due or estimated settlement amounts.

The Trust accrues costs and income that it expects to incur and earn through the end of liquidation to the extent it has a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the Consolidated Statements of Net Assets. Actual costs and income may differ from amounts reflected in the financial statements because of inherent uncertainty in estimating future events. These differences may be material. See Note 4 for further discussion. Actual costs incurred but unpaid as of September 30, 2015 are included in accounts payable, accrued liabilities and other liabilities on the Consolidated Statements of Net Assets.

In liquidation, the presentation for joint ventures historically consolidated under going concern accounting is determined based on the Trust’s planned exit strategy. Those ventures where the Trust intends to sell the property are presented on a gross basis with a payable to the non-controlling interest holder. Those ventures where the Trust intends to sell its interest in the venture, rather than the property, are presented on a net basis and are included in equity investments on the Consolidated Statements of Net Assets. Amounts due to non-controlling interests in connection with the disposition of consolidated joint ventures have been accrued and are recorded as liability for non-controlling interests.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

Net assets in liquidation represents the estimated liquidation value available to holders of Common Shares upon liquidation. Due to the uncertainty in the timing of the anticipated sale dates and the estimated cash flows, actual operating results and sale proceeds may differ materially from the amounts estimated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in determining the values of assets and liabilities, disclose contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenue and expenses during the reporting period. Under going concern accounting, the estimates that were particularly susceptible to management’s judgment include, but are not limited to, the impairment of real estate, loans and investments in ventures and real estate securities carried at fair value. In addition, estimates were used in accounting for the allowance for doubtful accounts. Under liquidation accounting, the Trust is required to estimate all costs and income that it expects to incur and earn through the end of liquidation including the estimated amount of cash it will collect on disposal of its assets and estimated costs incurred to dispose of assets. All of the estimates and evaluations are susceptible to change and actual results could differ materially from the estimates and evaluations.

Earnings Per Share

Prior to the adoption of the plan of liquidation, the Trust determined basic earnings per share on the weighted average number of Common Shares outstanding during the period and reflected the impact of participating securities. The Trust computed diluted earnings per share based on the weighted average number of Common Shares outstanding combined with the incremental weighted average effect from all outstanding potentially dilutive instruments.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

The Trust calculated earnings per share in accordance with relevant accounting guidance for participating securities and the two class method. The reconciliation of earnings attributable to Common Shares outstanding for the basic and diluted earnings per share calculation is as follows (in thousands, except per share data):


	One Month Ended July 31, 2014			Seven Months Ended July 31, 2014
Basic
Income (loss) from continuing operations	$	2,400		$	(2,572	)
Loss attributable to non-controlling interest		395			3,764
Preferred dividend of Series D Preferred Shares		(929	)		(6,502	)
Amount allocated to Restricted Common Shares		(11	)		(192	)

Income (loss) from continuing operations applicable to Common Shares		1,855			(5,502	)
Income from discontinued operations		84			11,235
Loss attributable to non-controlling interests from discontinued operations		—			54

Net income applicable to Common Shares for earnings per share purposes	$	1,939		$	5,787


Basic weighted-average Common Shares		35,825			35,821


Income (loss) from continuing operations	$	0.05		$	(0.15	)
Income from discontinued operations		—			0.31

Net income per Common Share - Basic	$	0.05		$	0.16


Diluted
Income (loss) from continuing operations	$	2,400		$	(2,572	)
Loss attributable to non-controlling interest		395			3,764
Preferred dividend of Series D Preferred Shares		(929	)		(6,502	)
Amount allocated to Restricted Common Shares		(11	)		(192	)

Income (loss) from continuing operations applicable to Common Shares		1,855			(5,502	)
Income from discontinued operations		84			11,235
Loss attributable to non-controlling interests from discontinued operations		—			54

Net income applicable to Common Shares for earnings per share purposes	$	1,939		$	5,787


Basic weighted-average Common Shares		35,825			35,821
Restricted Common Shares (1)		150			—

Diluted weighted-average Common Shares		35,975			35,821


Income (loss) from continuing operations	$	0.05		$	(0.15	)
Income from discontinued operations		—			0.31

Net income per Common Share - Diluted	$	0.05		$	0.16

(1)

The Trust’s Restricted Common Shares were anti-dilutive for the seven months ended July 31, 2014 and are not included in the weighted-average shares outstanding for the calculation of diluted earnings per Common Share. The Trust’s Restricted Common Shares were dilutive for the one month ended July 31, 2014. The amendments to the Restricted Common Shares discussed in Note 14 had no impact on the calculation of earnings per share for the period presented.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

No dividend was paid for the quarter ended September 30, 2014. On September 15, 2014 the Trust made the full liquidating distribution on its Series D Cumulative Redeemable Preferred Shares (the “Series D Preferred Shares”) of $25.4815 per Series D Preferred Share, which amount consisted of the $25.00 liquidation preference plus accrued and unpaid dividends to, but excluding, the date of payment. A liquidating distribution of $2.25 per Common Share was paid on January 15, 2015 to common shareholders of record on January 5, 2015. A liquidating distribution of $1.25 per Common Share was paid on June 16, 2015 to common shareholders of record on June 9, 2015.

4.	Liability for Estimated Costs in Excess of Estimated Receipts During Liquidation

The liquidation basis of accounting requires the Trust to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation. The Trust currently estimates that it will have costs in excess of estimated receipts during the liquidation. These amounts can vary significantly due to, among other things, the timing and estimates for executing and renewing leases, estimates of tenant improvement costs, the timing of property sales, direct costs incurred to complete the sales, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of operations. These costs are estimated and are anticipated to be paid out over the liquidation period.

The change in the liability for estimated costs in excess of estimated receipts during liquidation as of September 30, 2015 is as follows (in thousands):


	December 31, 2014			Cash Payments (Receipts)			Remeasurement of Assets and Liabilities			September 30, 2015
Assets:
Estimated net inflows from investments in real estate, loans receivable and secured financing receivable	$	25,169		$	(9,967	)	$	276		$	15,478

Liabilities:
Sales costs		(11,840	)		1,012			(4	)		(10,832	)
Corporate expenditures		(44,582	)		10,612			(1,557	)		(35,527	)

		(56,422	)		11,624			(1,561	)		(46,359	)

Total liability for estimated costs in excess of estimated receipts during liquidation	$	(31,253	)	$	1,657		$	(1,285	)	($	30,881	)

5.	Net Assets in Liquidation

Net assets in liquidation decreased by $42,112,000 during the nine months ended September 30, 2015. The primary reason for the decrease in net assets was due to liquidating distributions to holders of Common Shares of $45,531,000, a $1,557,000 increase in estimated corporate expenditures resulting primarily from increases in estimated fees payable to the advisor as a result of increases in liquidation values of certain investments and a $918,000 decrease in the value of the Trust’s loan securities resulting from a new appraisal of the collateral underlying the security. These decreases were offset by a $4,723,000 net increase in investments in real estate, a $499,000 net increase in the liquidation value of equity investments and a $400,000 decrease in the liability for non-controlling interests.

The net assets in liquidation at September 30, 2015 would result in liquidating distributions of approximately $15.17 per Common Share. This estimate of liquidating distributions includes projections of costs and expenses to be incurred during the period required to complete the plan of liquidation. There is inherent uncertainty with these projections, and they could change materially based on the timing of sales, the performance of underlying assets and any changes in the underlying assumptions of the projected cash flows.

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FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

6.	Property Dispositions

44 Monroe, Phoenix, Arizona – property sale – On April 14, 2015 the venture in which the Trust holds an 83.7% interest sold its apartment building located in Phoenix, Arizona for gross proceeds of $50,650,000. The entire net proceeds, after closing costs and pro-rations, of approximately $49,143,000 were used to pay down the loan collateralized by the remaining properties in the venture. The liquidation value of the property was $50,650,000 at December 31, 2014.

Cerritos, California – property sale - On September 16, 2015 the Trust sold its office property located in Cerritos, California for gross proceeds of $30,500,000 and received net proceeds of $6,174,000 after satisfaction of third party mortgage debt, closing costs and pro rations. The liquidation value of the property was $29,916,000 at December 31, 2014.

Highgrove, Stamford, Connecticut – contract for sale – On June 26, 2015 the venture in which the Trust holds an 83.7% interest entered into a contract to sell its apartment building located in Stamford, Connecticut for gross proceeds of $90,000,000. The buyer’s $2,000,000 deposit under the purchase contract became non-refundable, subject to customary closing conditions, on June 30, 2015. An additional $2,000,000 non-refundable deposit was received from the buyer in October 2015. If consummated, the sale is expected to close in the fourth quarter of 2015. The liquidation value of the property was $84,867,000 at December 31, 2014. The liquidation value at September 30, 2015 is $90,000,000 reflecting the contract for sale.

7.	Loans Receivable

The Trust’s loans receivable at September 30, 2015 and December 31, 2014 are as follows (in thousands):


				Carrying Amount (1)
Description	Loan Position	Stated Interest Rate September 30, 2015		September 30, 2015		December 31, 2014		Contractual Maturity Date

Rockwell	Mezzanine	12.0%		$	—	$	—		05/01/16
Churchill	Whole Loan	LIBOR + 3.75%			—		—		08/01/16
Popiu Shopping Village	B-Note	6.62%			2,778		2,804		01/06/17
Edens Center and Norridge Commons (2)	Mezzanine	LIBOR + 12%	(3)		3,098		18,690		03/09/17
Mentor Building	Whole Loan	10.0%			2,510		2,511		09/10/17

				$	8,386	$	24,005

(1)	The carrying amount represents the estimated amount expected to be collected on disposition of the loan plus contractual interest receivable.

(2)	Carrying amount includes the par amount plus the estimated amount to be collected on the participation interest of $3,000 and accrued interest of $1. The loan was repaid in full on October 9, 2015.

(3)	LIBOR floor of 0.5%.

Edens Center and Norridge Commons – On February 5, 2015 the Norridge, Illinois property, which was one of the two properties that collateralized this loan receivable, was sold and the Trust received a principal payment of $15,275,000 plus all accrued and unpaid interest due in connection with the sale. The outstanding principal balance on the loan receivable was $97,000 at September 30, 2015. Upon satisfaction of the loan, the Trust was entitled to a participation interest equal to 30% of the value of both of the properties which collateralized the loan in excess of $115,000,000. On October 9, 2015 the Trust received $3,100,000 in full satisfaction of the loan receivable and the participation interest.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

The carrying amount of loans receivable at September 30, 2015 and December 31, 2014 includes accrued interest of $27,000 and $218,000, respectively.

The weighted average coupon as calculated on the par value of the Trust’s loans receivable was 8.05% and 10.55% at September 30, 2015 and December 31, 2014, respectively and the weighted average yield to maturity as calculated on the carrying value of the Trust’s loan receivable was 13.73% and 12.78% at September 30, 2015 and December 31, 2014, respectively.

Loan Receivable Activity

Activity related to loans receivable is as follows (in thousands):


	Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014

Balance at beginning of period	$	24,005		$	101,100
Purchase and advances		—			35,992
Interest received, net		(191	)		(81	)
Repayments/sale proceeds/forgiveness		(15,428	)		(81,739	)
Loan discount accretion		—			2,086
Discount accretion received in cash		—			(5,865	)
Adjustment for conversion to liquidation basis		—			6,071
Change in liquidation value		—			4,750

Balance at end of period	$	8,386		$	62,314

The following table summarizes the Trust’s interest and discount accretion income for the one and seven months ended July 31, 2014 (in thousands):


	One Month Ended July 31, 2014		Seven Months Ended July 31, 2014

Interest on loan assets	$	899	$	5,770
Exit fee/prepayment penalty		—		1,787
Accretion of loan discount		495		2,086

Total interest and discount accretion	$	1,394	$	9,643

Non-Performing Loans

Prior to adopting the liquidation basis of accounting, the Trust considered a loan to be non-performing and placed loans on non-accrual status at such time as management determined it was probable that it would be unable to collect all amounts due according to the contractual terms of the loan. While on non-accrual status, based on the Trust’s judgment as to collectability of principal, loans were either accounted for on a cash basis, where interest income was recognized only upon actual receipt of cash, or on a cost-recovery basis, where all cash receipts reduced a loan’s carrying value.

As of July 31, 2014, there was one non-performing loan with past due payments. The Trust did not record any provision for loan loss for the one and seven months ended July 31, 2014.

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FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

Secured Financing Receivable

In August 2013 the Trust closed on an agreement to acquire its venture partner’s (“Elad”) 50% interest in the mezzanine lender with respect to the One South State Street, Chicago, Illinois property (“Lender LP”) for $30,000,000. In connection with the transaction, the Trust entered into an option agreement with Elad granting Elad the right, but not obligation, to repurchase the interest in the venture. The option agreement provides Elad, as the transferor, the option to unilaterally cause the return of the asset at any time at the earlier of two years from and after August 21, 2013 or an event of default on Lender LP’s mezzanine debt. As such, Elad is able to retain control of its interest in Lender LP for financial reporting purposes as the exercise of the option is unconditional other than for the passage of time. As a result, for financial reporting purposes, the transfer of the financial asset is accounted for as a secured financing rather than an acquisition. The $30,000,000 acquisition price is recorded as a secured financing receivable. Under the going concern basis of accounting, the Trust recognized interest income on the secured financing receivable on an accrual basis in accordance with GAAP, at an annual interest rate of 15%. The Trust recorded $324,000 and $2,215,000 of interest income during the one and seven months ended July 31, 2014.

8.	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 September 30, 2015 and December 31, 2014:


Venture Partner	Equity Investment	Nominal % Ownership at September 30, 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	701 Seventh WRT Investor LLC		81.0	%		81.0	%
RS Summit Pointe (1)	RS Summit Pointe Apartments LLC		80.0	%		80.0	%
Freed (3)	Edens Plaza Associates LLC		<1	%		<1	%
Freed (1) (3)	Irving-Harlem Venture Limited		<1	%		<1	%
Gancar Trust (2)	Vintage Housing Holdings LLC		n/a			75.0	%

(1)	Investment was previously consolidated under going concern accounting. See Note 3 “Liquidation Basis of Accounting” for further discussion.

(2)	The Trust’s investment was sold during the nine months ended September 30, 2015.

(3)	The Trust’s investment was sold during the fourth quarter of 2015.

Vintage Housing Holdings – On January 2, 2015 the Trust contributed an additional $5,645,000 to the venture to acquire the limited partner interests in two of the underlying properties. During the six months ended June 30, 2015 the Trust received distributions, inclusive of return of capital distributions, totaling $4,959,000 from the venture. On June 1, 2015 the Trust sold its interest in Vintage Housing Holdings LLC to an independent third party and received net proceeds of approximately $82,471,000. The liquidation value of this investment was $82,928,000 at December 31, 2014.

Concord Debt Holdings – During May 2015 the Trust received a distribution of $20,173,000 from its Concord Debt Holdings LLC venture. The distribution was in connection with the sale of the luxury hotel assets owned by the MSREF hotel venture in which Concord Debt Holdings LLC holds an interest.

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FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

701 Seventh Avenue – The Trust has invested an additional $5,258,000 in this venture in the first nine months of 2015. As of September 30, 2015 the Trust has total invested capital in the venture of $111,882,000. In October 2015 the Trust invested an additional $1,039,000 in this venture bringing its total invested capital in the venture to $112,921,000 at October 31, 2015.

CDH CDO LLC - On June 25, 2015 the venture closed on the sale of four bond assets and one loan asset for gross proceeds of $54,122,000. The proceeds of the sale were utilized to fully satisfy the debt of the venture. Additionally, in June 2015 a loan asset held by the venture was repaid at par, which was consistent with the Trust’s liquidation value at December 31, 2014. On July 1, 2015 the Trust received a $6,200,000 distribution from this venture.

Edens Center and Norridge Commons – On October 9, 2015, in connection with the repayment in full of the loan receivable collateralized by the Edens Center and Norridge Commons properties, the Trust sold its general partner interests in the two properties for an aggregate price of $493,000 pursuant to the terms of an existing option agreement. The sale price was consistent with the Trust’s liquidation value at September 30, 2015.

Debt

Mortgage Loans Payable

Mortgage loans payable are carried at their contractual amounts due under liquidation accounting. The Trust had outstanding mortgage loans payable of $223,174,000 and $296,954,000 at September 30, 2015 and December 31, 2014, respectively. The mortgage loan payments of principal and interest are generally due monthly, quarterly or semi-annually and are collateralized by applicable real estate of the Trust.

The Trust’s mortgage loans payable at September 30, 2015 and December 31, 2014 are summarized as follows (in thousands):


Location of Collateral	Maturity	Spread Over LIBOR (1)		Interest Rate at September 30, 2015			September 30, 2015		December 31, 2014

Chicago, IL	Mar 2016	—			5.75	%	$	19,201	$	19,491
New York, NY	May 2016	Libor + 2.5%	(2)		3.50	%		50,674		51,034
Greensboro, NC	Aug 2016	—			6.22	%		13,600		13,600
Lisle, IL	Oct 2016	Libor + 2.5%			2.69	%		5,500		5,713
Stamford, CT (4)(5)	Oct 2016	Libor + 2.0%	(3)		2.69	%		33,448		44,923
Houston, TX (4)(5)	Oct 2016	Libor + 2.0%	(3)		2.69	%		44,319		59,524
Lisle, IL	Mar 2017	—			5.55	%		5,330		5,392
Orlando, FL	Jul 2017	—			6.40	%		35,843		36,347
Plantation, FL	Apr 2018	—			6.48	%		10,443		10,550
Churchill, PA	Aug 2024	—			3.50	%		4,816		4,918
Phoenix, AZ (4)(5)	n/a	—			n/a			—		22,462
Cerritos, CA (6)	n/a	—			n/a			—		23,000

							$	223,174	$	296,954

(1)	The one-month LIBOR rate at September 30, 2015 was 0.1930%. The one-month LIBOR rate at December 31, 2014 was 0.17125%.

(2)	The loan has a LIBOR floor of 1%.

(3)	The loan has an interest rate swap which effectively fixes LIBOR at 0.69%.

(4)	These properties are cross-collateralized. Proceeds from property sales go 100% to repay the mortgage loan.

(5)	A portion of the loan was satisfied during 2015 in connection with the sale of a property.

(6)	The loan was satisfied during 2015 in connection with the sale of the property.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

Notes Payable

In conjunction with the 2012 loan modification on the property located in Cerritos, California the Trust assumed a $14,500,000 B Note that bore interest at 6.6996% per annum and required monthly interest payments of approximately $12,000 with the balance of the interest accruing. The loan modification agreement provided for a participation feature whereby the B Note could be fully satisfied with proceeds from the sale of the property after the Trust received a 9.0% priority return on its capital, during a specified time period as defined in the loan modification document. As a result of the loan modification, the B Note did not have a contractually specified settlement amount. As such, the B Note was recorded at the estimated settlement amount based on an estimated sale of the property. As discussed in Note 6 – Property Dispositions, the property was sold on September 16, 2015. No payment was due to the holder of the B Note in connection with the sale. The liquidation value of the B Note was $0 at December 31, 2014.

10.

Senior Notes Payable

In August 2012 the Trust issued a total $86,250,000 of its 7.75% Senior Notes (the “Senior Notes”) at an issue price of 100% of par value. Pursuant to its securities repurchase plan, as of August 15, 2015 the Trust had acquired $14,995,000 of its outstanding Senior Notes in open market transactions for an aggregate price of $15,707,000. The Trust redeemed the Senior Notes in full effective August 15, 2015. The aggregate redemption price paid was $72,635,000 (or $25.484375 per $25.00 face amount Senior Note) which represents the face amount of the Senior Notes not owned by the Trust plus accrued and unpaid interest to, but not including, August 15, 2015.

11.

Non-controlling Interests

Under going concern accounting, consolidated joint ventures are recorded on a gross basis with an allocation of equity to non-controlling interest holders. Under liquidation accounting, the presentation for joint ventures historically consolidated under going concern accounting is determined based on the Trust’s planned exit strategy. Those ventures in which the Trust intends to sell the underlying property are presented on a gross basis with a payable to the non-controlling interest holder. Those ventures in which the Trust intends to sell its interest in the venture, rather than the property, are accounted for as an equity investment and are presented on a net basis without a non-controlling interest component. In this regard, the Trust’s investments in the Norridge, Illinois property and Summit Pointe Apartments, which were consolidated under going concern accounting, are accounted for as equity investments under liquidation accounting.

12.

Commitments and Contingencies

In addition to the initial purchase price of certain loans and operating properties, the Trust has future funding commitments attributable to its 701 Seventh Avenue investment which total approximately $13,118,000 at September 30, 2015 with the option to fund additional capital calls in excess of the Trust’s $125,000,000 commitment.

The Trust’s venture which owns the property located at 450 W 14^th Street, New York, New York is subject to a ground lease which expires on June 1, 2053. As of September 30, 2015, in connection with the ground lease, the venture has commitments of $383,000, $1,592,000, $1,656,000, $1,791,000, $1,844,000 and $105,784,000 for the years ending December 31, 2015, 2016, 2017, 2018, 2019 and thereafter, respectively.

The Trust is involved from time to time in litigation on various matters, including disputes with tenants and disputes arising out of agreements to purchase or sell properties. Given the nature of the Trust’s business activities, these lawsuits are considered routine to the conduct of its business. The result of any particular lawsuit cannot be predicted because of the very nature of litigation, the litigation process and its adversarial nature, and the jury system. The Trust does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on its financial condition or results of operations.

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FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

Churchill, Pennsylvania - In 2011 the Trust was conveyed title to the land underlying the Churchill, Pennsylvania property. Prior to the conveyance of the land, a Phase II environmental study was performed. The study found that there were certain contaminants at the property all of which were within permitted ranges. In addition, given the nature and use of the property currently and in the past as a laboratory that analyzes components and machinery that were utilized at nuclear power plants, it is possible that there may be contamination that could require remediation.

13.

Related-Party Transactions

FUR Advisors - The activities of the Trust are administered by FUR Advisors LLC (“FUR Advisors”) pursuant to the terms of the Advisory Agreement between the Trust and FUR Advisors. FUR Advisors is controlled by and partially owned by the executive officers of the Trust. Pursuant to the terms of the Advisory Agreement, FUR Advisors is responsible for providing asset management services to the Trust and coordinating with the Trust’s shareholder transfer agent and property managers. FUR Advisors is entitled to receive a base management fee and a termination fee and/or an incentive fee in accordance with the terms of the Advisory Agreement. In addition, FUR Advisors or its affiliate is entitled to receive property and construction management fees subject to the approval of the independent Trustees of the Trust.

The following table sets forth the fees and reimbursements paid by the Trust for the three and nine months ended September 30, 2015 and 2014 to FUR Advisors and Winthrop Management LP (“Winthrop Management”) (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014

Base Asset Management Fee (1)	$	1,540	$	2,296	$	4,859	$	7,070
Property Management Fee		248		381		793		1,038
Construction Management Fee		10		38		107		227

	$	1,798	$	2,715	$	5,759	$	8,335

(1)	Includes fees on third party contributions of $7 and $7 for the three months ended September 30, 2015 and 2014, respectively, and of $20 and $14 for the nine months ended September 30, 2015 and 2014, respectively.

Base Asset Management Fee – FUR Advisors is entitled to receive a base management fee of 1.5% of equity as defined in the Advisory Agreement and a termination fee and/or incentive fee in accordance with the terms of the Advisory Agreement. Additionally, FUR Advisors receives a fee equal to 0.25% of any equity contributions by unaffiliated third parties to a venture managed by the Trust. Under going concern accounting, base management fees were expensed and classified as related party fees in the Consolidated Statement of Operations.

In connection with the adoption of the plan of liquidation, the Trust accrues costs it expects to incur through the end of the liquidation. In this regard, at September 30, 2015 the Trust has accrued, based on its estimates of the timing and amounts of liquidating distributions to be paid to Common Shareholders, base management fees of $7,650,000, exclusive of the $1,540,000 included in related party fees payable, termination fees of $9,496,000 and incentive fees of $15,334,000. These amounts are included in liabilities for estimated costs in excess of estimated receipts during liquidation. Actual fees incurred may differ significantly from these estimates due to inherent uncertainty in estimating future events.

Incentive Fee / Termination Fee - The incentive fee is equal to 20% of any amounts available for distribution in excess of the threshold amount and is only payable at such time, if at all, (i) when holders of the Trust’s Common Shares receive aggregate dividends above the threshold amount or (ii) 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 shareholders have received dividends in excess of the threshold amount (set at $569,963,000 on December 31, 2014 plus an annual return thereon equal to the greater of (x) 4% or (y) the 5 year U.S. Treasury Yield plus 2.5%, which equated to 4% for the third quarter of 2015, (such return, the “Growth Factor”) less any dividends paid from and after January 1, 2015). 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 the Trust’s Advisor, and if on the date of termination the net value of the Trust’s assets exceeds the threshold amount. At September 30, 2015 the threshold amount required to be

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FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

distributed before any incentive fee would be payable to FUR Advisors was $459,143,000, which was equivalent to $12.82 per Common Share. At September 30, 2015, based on the Trust’s estimate of liquidating distributions, it is estimated that the Advisor would be entitled to an incentive fee of $15,334,000 in connection with the liquidation. This amount has been accrued and is included in liabilities for estimated costs in excess of estimated receipts during liquidation.

With respect to the termination 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 the Trust’s Advisor, (ii) a disposition of all or substantially all of the Trust’s assets, or (iii) an election by the Trust to orderly liquidate the Trust’s assets. The termination fee, if payable, is equal to the lesser of (i) the base management fee paid to the Trust’s Advisor 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 the Trust’s 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 $9.89 per Common Share in excess of the Growth Factor have been paid. For example, if the Trust had been liquidated at September 30, 2015, the termination fee would only have been payable if total dividends of approximately $9.89 per Common Share had been paid, and then only until the total termination fee paid would have equaled $9,496,000 (the base management fee for the twelve months prior to the approved plan of liquidation), which amount would be achieved when total dividends paid per Common Share equaled approximately $10.93. At September 30, 2015 it is estimated that the Advisor will be entitled to a termination fee of $9,496,000 in connection with the liquidation. This amount has been accrued and is included in liabilities for estimated costs in excess of estimated receipts during liquidation.

Property Management and Construction Management - Winthrop Management, an affiliate of FUR Advisors and the Trust’s executive officers, assumed property management responsibilities for various properties owned by the Trust. Winthrop Management receives a property management fee and construction management fee pursuant to the terms of individual property management agreements. Prior to the adoption of the plan of liquidation, construction management fees were capitalized in accordance with GAAP.

On September 1, 2015 the Operating Partnership entered into a services agreement with Winthrop Management whereby the Operating Partnership will now perform leasing services to certain properties. The agreement will result in a net reduction in the property management fees paid by the Trust.

At September 30, 2015 $1,540,000 payable to FUR Advisors and $297,000 payable to Winthrop Management were included in related party fees payable.

14.

Restricted Share Grants

On February 1, 2013 the Board approved the issuance of 600,000 shares of Restricted Common Shares (“Restricted Shares”) to the Trust’s Advisor, 500,000 of which were subject to the approval of the shareholders to the increase in the number of shares issuable under the Trust’s 2007 Stock Option Plan (the “2007 Plan”). The initial 100,000 Restricted Shares were issued on February 28, 2013. At the May 21, 2013 annual shareholders meeting the increase in shares issuable under the 2007 Plan from 100,000 to 1,000,000 was approved by the requisite number of shareholders and the remaining 500,000 Restricted Shares were issued on May 28, 2013. The Restricted Shares are subject to forfeiture through May 5, 2016 (the “Forfeiture Period”). Except in limited circumstances, if the holder of the Restricted Shares does not remain in continuous employment with FUR Advisors or its affiliate through the Forfeiture Period, all of their rights to the Restricted Shares and the associated dividends held in escrow will be forfeited. Dividends will be paid on the issued Restricted Shares in conjunction with dividends on Common Shares not issued under the 2007 Plan. However, the recipients of the Restricted Shares will only receive dividends as if the shares vested quarterly over the Forfeiture Period, with the remaining dividends to be placed into escrow and paid to the holders at the expiration of the Forfeiture Period.

Under going concern accounting, until the awards were no longer subject to forfeiture, the Trust measured stock-based compensation expense at each reporting date for any changes in fair value and recognized the expense prorated for the portion of the requisite service period completed. Accordingly, the Trust recognized $120,000 and $1,450,000 in non-cash compensation expense for the one and seven months ended July 31, 2014. Under liquidation accounting, compensation expense is no longer recorded as the vesting of the Restricted Shares does not result in cash outflow for the Trust.

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FORM 10-Q SEPTEMBER 30, 2015

(Unaudited)

In connection with the adoption of the plan of liquidation, the Trust’s compensation committee authorized amendments to the grant agreements to provide for an early expiration of the Forfeiture Period which now expires on May 5, 2016 and the reissuance of forfeited shares. In this regard, 10,000 Restricted Shares, which had previously been forfeited, were issued on September 5, 2014. Additionally, the Trust’s compensation committee agreed to fully vest 8,750 Restricted Shares held by non-executive officers whose employment was terminated in connection with the plan of liquidation. As a result, there were 591,250 Restricted Shares issued and outstanding at September 30, 2015.

15.

Reportable Segments

The FASB guidance on segment reporting establishes standards for the way that public business enterprises report information about operating segments in financial statements and requires that those enterprises report selected financial information about reportable segments in interim financial reports issued to shareholders.

Prior to the approval of the plan of liquidation, based on the Trust’s method of internal reporting, management determined that it had three reportable segments: (i) the ownership of operating properties; (ii) the origination and acquisition of loans and debt securities secured directly or indirectly by commercial and multi-family real property – collectively, loan assets; and (iii) the ownership of equity and debt securities in other REITs – REIT securities. Subsequent to the adoption of the plan of liquidation, the Trust no longer makes operating decisions or assesses performance in separate segments. Accordingly, the Trust has only one reporting and operating segment subsequent to July 31, 2014.

16.

Variable Interest Entities

Consolidated Variable Interest Entities

Under going concern accounting, consolidated variable interest entities are those where the Trust is the primary beneficiary of a variable interest entity. The primary beneficiary is the party that has a controlling financial interest in the VIE, which is defined by the entity having both of the following characteristics: 1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance, and 2) the obligation to absorb losses and right to receive the returns from the VIE that could be significant to the VIE. At July 31, 2014, the Trust had identified two consolidated variable interest entities; its Cerritos, California office property and 1515 Market Street, its office property located in Philadelphia, Pennsylvania. The 1515 Market Street property was sold on December 2, 2014. The Cerritos, California property was sold on September 16, 2015.

Variable Interest Entities Not Consolidated

Equity Method and Preferred Equity Investments – Under going concern accounting, the Trust reviewed its various equity method and preferred equity investments and identified six investments for which the Trust held a variable interest in a VIE at September 30, 2014. Of these six interests there were two investments for which the underlying entities did not have sufficient equity at risk to permit them to finance their activities without additional subordinated financial support. There were four additional entities for which the VIE assessment was primarily based on the fact that the voting rights of the equity holders were not proportional to their obligations to absorb expected losses and rights to receive residual returns of the legal entities. These unconsolidated joint ventures were those where the Trust was not the primary beneficiary of a VIE.

Loans Receivable and Loan Securities – Under going concern accounting, the Trust reviewed its loans receivable and loan securities and at September 30, 2014 two of these assets were identified as variable interests in a VIE because the equity investment at risk at the borrowing entity level was not considered sufficient for the entity to finance its activities without additional subordinated financial support. There was one investment where the equity holders lacked the right to receive returns due to the lender’s participation interest in the debt.

Certain loans receivable and loan securities which had been determined to be VIEs were performing assets, meeting their debt service requirements. In those cases the borrower held legal title to the real estate collateral and had the power to direct the activities that most significantly impacted the economic performance of the VIE, including management and leasing activities. In the event of default under those loans, the Trust only had protective rights and its obligation to absorb losses was limited to the extent of its loan investment. The borrower was determined to be the primary beneficiary for those performing assets.

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The Trust determined that it did not have the power to direct the activities of the properties collateralizing any of its loans receivable and loan securities. For this reason, management believed that it did not control, nor was it the primary beneficiary of these properties. Accordingly, the Trust accounted for these investments under the guidance for loans receivable and real estate debt investments.

17.

Subsequent Events

Edens Center and Norridge Commons – On October 9, 2015 the Trust received repayment in full of the loan receivable collateralized by the Edens Center and Norridge Commons properties and sold its general partner interests in the two properties immediately following the loan repayment. See Note 7 – Loans Receivable for details on the loan repayment and Note 8 – Equity Investments for details on the sale of the general partner interests.

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FORM 10-Q SEPTEMBER 30, 2015

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “would,” “may” or similar expressions in this Quarterly Report on Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those set forth in our Annual Report on Form 10-K for the year ended December 31, 2014 under “Forward Looking Statements” and “Item 1A – Risk Factors,” as well as our other filings with the Securities and Exchange Commission. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on forward-looking statements, which are based on information, judgments and estimates at the time they are made, to anticipate future results or trends.

Management’s Discussion and Analysis of Financial Condition and Results of Operations include a discussion of our unaudited consolidated interim financial statements and footnotes thereto. These unaudited interim financial statements are prepared in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Overview

On April 28, 2014 our Board of Trustees adopted a plan of liquidation. The plan, which provides for an orderly liquidation of our assets, was approved by holders of a majority of our common shares of beneficial interest (“Common Shares”) at a special meeting of shareholders on August 5, 2014. As a result of the adoption of the plan of liquidation, we are not permitted to make any new investments other than to make protective acquisitions or advances with respect to our existing assets. We will, however, be able to satisfy any existing contractual obligations including any capital call requirements and acquisitions or dispositions pursuant to buy-sell provisions under existing joint venture documentation, pay for required tenant improvements and capital expenditures at our real estate properties and repurchase our existing Common Shares. In addition, we will be able to invest our cash reserves in short-term U.S. Treasuries or other short-term obligations.

We are a diversified REIT, and prior to the adoption of the plan of liquidation, we operated in three strategic segments: (i) operating properties; (ii) loan assets; and (iii) REIT securities. As value investors we focused and aggressively pursued our investment activity in the segment we believed would generate the greater overall return to us given market conditions at the time. Under the plan of liquidation, our focus is on selling our assets in a manner that maximizes the return to our holders of Common Shares. We will continue to actively manage our remaining assets throughout the liquidation process.

In order to comply with applicable tax laws, any of our assets not sold by August 5, 2016 will be distributed into a liquidating trust. If we transfer our assets to a liquidating trust, our shareholders will receive beneficial interests in the liquidating trust equivalent to those held in the Trust, which beneficial interests will not be registered and will generally not be transferrable.

The timing and amount of the liquidating distributions to the shareholders will be determined by our Board of Trustees. The dissolution process and the amount and timing of distributions to shareholders involve risks and uncertainties. As such, it is impossible at this time to determine the ultimate amount of liquidation proceeds that will actually be distributed to holders of Common Shares or the timing of such payments. To date, liquidating distributions have been paid totaling $3.50 per Common Share.

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Although we expect that our Common Shares will continue to be traded on the New York Stock Exchange until our assets are either disposed of or transferred to a liquidating trust, under New York Stock Exchange rules it is possible that as we sell our assets we may not meet the listing standards of the New York Stock Exchange. If this occurs, our Common Shares could be delisted.

Consolidated Operating Properties

As of September 30, 2015 our consolidated properties were approximately 95.6% leased compared to approximately 92.1% leased at December 31, 2014.

Equity Investment Activity

Vintage Housing Holdings – We invested an additional $5,645,000 in this venture in the first quarter of 2015. The capital contribution was used to acquire the limited partnership interest in two of the underlying partnerships. During the first half of 2015 we received distributions totaling $4,959,000 from the venture. On June 1, 2015 we sold our interest in the venture and received net proceeds of approximately $82,471,000. The liquidation value of this investment was $82,928,000 at December 31, 2014.

Concord Debt Holdings – During May 2015 we received a distribution of $20,173,000 from our Concord Debt Holdings LLC venture. The distribution was in connection with the sale of the luxury hotel assets owned by the MSREF hotel venture in which Concord Debt Holdings LLC holds an interest.

701 Seventh Avenue – We invested an additional $5,258,000 in this venture in the first nine months of 2015 bringing our total invested capital to $111,882,000 at September 30, 2015. In October 2015 we invested an additional $1,039,000 in this venture.

During the second quarter of 2015 the indebtedness encumbering the asset held by the venture was modified to (i) provide for an additional one year extension option potentially extending the final maturity on the loan, if fully extended, to January 31, 2020 and (ii) permit up to $200,000,000 in 5.9% EB-5 financing (of which $98,000,000 has been funded to date), with a corresponding reduction in the existing mezzanine loan borrowing, thereby resulting in interest savings to the venture.

CDH CDO LLC - On June 25, 2015 the venture closed on the sale of four bond assets and one loan asset for gross proceeds of $54,122,000. The proceeds of the sale were utilized to fully satisfy the debt of the venture. Additionally, in June 2015 a loan asset held by the venture was repaid at par which was consistent with our liquidation value. On July 1, 2015 we received a $6,200,000 distribution from this venture.

Edens Center and Norridge Commons – sale of interest – On October 9, 2015, in connection with the repayment of the loan receivable discussed below, we sold our general partner interests in the two entities for an aggregate price of $493,000 pursuant to the terms of an existing option agreement. The sale price was consistent with our liquidation value at September 30, 2015.

Loan Activity

Edens Center and Norridge Commons – loan pay down – On February 5, 2015 the Norridge, Illinois property was sold, and we received a principal payment of $15,275,000 in connection with the sale. The outstanding principal balance on the loan receivable was $225,000 following the repayment. Additional payments on the loan have been received reducing the outstanding principal balance to $97,000 at September 30, 2015. Upon satisfaction of the loan, we were entitled to a participation interest equal to 30% of the value of both of the properties which collateralized the loan in excess of $115,000,000. On October 9, 2015 we received $3,100,000 in full satisfaction of the loan receivable, accrued and unpaid interest, and the participation interest.

Disposition Activity

44 Monroe - property sale - On April 14, 2015 the venture in which we hold an 83.7% interest sold its apartment building located in Phoenix, Arizona for gross proceeds of $50,650,000. The entire net proceeds, after closing costs and pro-rations, of approximately $49,143,000 were used to pay down the loan collateralized by the remaining properties in the venture. The liquidation value of this property was $50,650,000 at December 31, 2014.

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Cerritos, California – property sale - On September 16, 2015 we sold our office property located in Cerritos, California for gross proceeds of $30,500,000 and received net proceeds of $6,174,000 after satisfaction of third party mortgage debt, closing costs and pro rations. The liquidation value of the property was $29,916,000 at December 31, 2014.

Highgrove, Stamford, Connecticut – contract for sale – On June 26, 2015 the venture in which we hold an 83.7% interest entered into a contract to sell its apartment building located in Stamford, Connecticut for gross proceeds of $90,000,000. The buyer’s $2,000,000 deposit under the purchase contract became non-refundable, subject to customary conditions, on June 30, 2015. An additional $2,000,000 non-refundable deposit was received from the buyer in October 2015. If consummated, the sale is expected to close in the fourth quarter of 2015. The liquidation value of the property was $84,867,000 at December 31, 2014. The liquidation value at September 30, 2015 is $90,000,000 reflecting the contract for sale.

Liquidity and Capital Resources

At September 30, 2015 we held $56,716,000 in unrestricted cash and cash equivalents. Our total assets and net assets in liquidation were $865,410,000 and $552,592,000, respectively at September 30, 2015. Our ability to meet our obligations is contingent upon the disposition of our assets in accordance with our plan of liquidation. We estimate that the proceeds from the sale of assets pursuant to the plan of liquidation will be adequate to pay our obligations, however, we cannot provide any assurance as to the prices or net proceeds we will receive from the disposition of our assets.

We believe that cash flow from operations along with sale proceeds will continue to provide adequate capital to fund our operating and administrative and other expenses incurred during liquidation, as well as debt service obligations in the short term. As a REIT, we must distribute annually at least 90% of our REIT taxable income.

Our primary sources of funds include:

•

cash and cash equivalents;

•

rents and reimbursements received from our operating properties;

•

payments received under our loan assets;

•

sale of existing assets; and

•

cash distributions from joint ventures.

Contractual Obligations

Future Funding Requirements

We have future funding requirements relating to our 701 Seventh Avenue investment which total approximately $13,118,000 at September 30, 2015 with the option to fund additional capital calls in excess of our $125,000,000 commitment if we believe the additional investment would be accretive to the holders of our Common Shares. We, through our investment in WRT One South State Lender LP, have future funding commitments related to tenant improvements and capital expenditure needs at the property located at One South State Street, Chicago, Illinois. We have committed to fund 100% of retail tenant improvement and capital expenditure needs and 80% of office tenant improvement and capital expenditure needs that are not met by current operating cash flow of the property. In October 2015 we funded $1,367,000 for tenant improvements. Based on recent lease signings at the property, we anticipate funding an additional $5,488,000 over the next six months in connection with this commitment. Any amounts funded pursuant to this commitment will be considered additions to the mezzanine loan and will accrue interest at the rate of 15% per annum.

Debt Maturities

At September 30, 2015, our statement of net assets contains mortgage loans payable of $223,174,000. We have no mortgage debt maturing in 2015 and $166,742,000 maturing in 2016, with the remainder maturing in 2017 or later. We redeemed our Senior Notes in full effective August 15, 2015. The aggregate redemption price paid was $72,635,000 (or $25.484375 per $25.00 face amount Senior Note) which represented the face amount of the Senior Notes not owned by us plus accrued and unpaid interest to, but not including, August 15, 2015. We continually evaluate our debt maturities and, based on our current assessment, we believe that, to the extent we are unable to sell an asset prior to a loan’s maturity, there are viable financing and refinancing alternatives for debts as they mature that will not materially adversely impact our liquidity or our expected financial results.

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Cash Flows

Our level of liquidity based upon cash and cash equivalents decreased by approximately $70,867,000 from $127,583,000 at December 31, 2014 to $56,716,000 at September 30, 2015.

The holders of Common Shares approved a plan of liquidation on August 5, 2014 and we adopted the liquidation basis of accounting effective August 1, 2014. We did not make any acquisitions in new investments in 2015, and in accordance with the plan of liquidation, no further acquisitions are expected.

Our primary sources of non-operating cash flow for the nine months ended September 30, 2015 include:

•

$83,886,000 in sale proceeds and return of capital distributions from our Vintage Housing Holdings equity investment;

•

$21,570,000 in distributions from our Concord Debt Holdings equity investment from the payoff of underlying loan assets;

•

$15,402,000 in principal repayments on our Edens Center and Norridge Commons loan receivable;

•

$6,200,000 in distributions from our CDH CDO equity investment from the sale and payoff of underlying loan assets; and

•

$6,174,000 in net proceeds from the sale of our Cerritos, California property after satisfaction of third party mortgage debt, closing costs and pro rations.

Our primary non-operating uses of cash flow for the nine months ended September 30, 2015 include:

•

$127,488,000 for payment of liquidating distributions to our holders of Common Shares;

•

$71,255,000 for redemption in full of our Senior Notes;

•

$5,258,000 for additional contributions to our 701 Seventh Avenue equity investment; and

•

$5,645,000 for additional contributions to our Vintage Housing Holdings equity investment.

Common and Preferred Share Dividends

As a result of the adoption of the plan of liquidation, as required by the terms of our Series D Preferred Shares, dividends on our Common Shares were suspended until the liquidation preference on our Series D Preferred Shares was satisfied. The liquidation preference on our Series D Preferred Shares was satisfied on September 15, 2014. Accordingly, we are no longer restricted by the terms of Series D Preferred Shares from paying dividends on our Common Shares. It is our Board of Trustees’ present expectation that dividends will be paid no less frequently than semi-annually beginning in 2015. However, the actual amount and timing of, and record dates for, dividends on our Common Shares will be determined by our Board of Trustees and will depend upon the timing and proceeds of the sale of our assets and the amounts deemed necessary by our Board of Trustees to pay or provide for our liabilities and obligations and REIT requirements. Any such dividends on the Common Shares will be deemed a return of capital until the applicable holder has received dividends totaling its cost basis.

A liquidating distribution of $2.25 per Common Share was paid on January 15, 2015 to holders of Common Shares of record on January 5, 2015. A liquidating distribution of $1.25 per Common Share was paid on June 16, 2015 to holders of Common Shares of record on June 9, 2015.

Comparability of Financial Data from Period to Period

Under going concern accounting, the comparability of financial data from period to period was affected by several items including (i) the timing of our property acquisitions and leasing activities; (ii) the purchases and sales of assets and investments; (iii) when material other-than-temporary impairment losses on assets in our portfolio are taken; (iv) fluctuations in the fair value of our securities and loan securities carried at fair value; and (v) the reclassification of assets.

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Results of Operations

In light of the adoption of liquidation basis accounting as of August 1, 2014, the results of operations for the current year periods are not comparable to the prior year periods. In addition, prior to the adoption of the plan of liquidation, we were engaged in the business of owning real property and real estate related assets which we categorized into three reportable segments: (i) operating properties, (ii) loan assets and (iii) REIT securities. Subsequent to the adoption of the plan of liquidation, we no longer classify our assets in these separate segments to make operating decisions or assess performance. Accordingly, we have only one reporting and operating segment subsequent to July 31, 2014. Changes in liquidation values of our assets are discussed below under Changes in Net Assets in Liquidation.

Our remaining assets continue to perform in a manner that is relatively consistent with prior reporting periods. We have experienced no significant changes in occupancy or rental rates and, with the exception of our Rockwell loan receivable, our loan assets continue to perform in accordance with their terms.

Due to the adoption of the plan of liquidation we are no longer reporting funds from operations as we no longer consider this to be a key performance measure.

Changes in Net Assets in Liquidation

Period from January 1, 2015 through September 30, 2015

Net assets in liquidation decreased by $42,112,000 during the period January 1, 2015 through September 30, 2015. The decrease in net assets in liquidation was the result of $45,531,000 of liquidating distributions to holders of our Common Shares partially offset by a $3,419,000 net increase in liquidation values. The primary reasons for the increase in liquidation values were as follows:

•

a $5,133,000 increase in the liquidation value of our Stamford, Connecticut residential property based on the contract for sale, partially offset by a corresponding $866,000 increase in the liability for non-controlling interest in this property, plus a $119,000 increase in estimated receipts at the property due to a change in the anticipated holding period of the property;

•

a $3,975,000 increase in the liquidation value of our Chicago, Illinois (One East Erie) property based on recent marketing efforts. The anticipated holding period for the property has been extended until the mortgage loan can be pre-paid without penalty. The extended hold period results in a $1,397,000 increase in estimated receipts at the property;

•

a $3,642,000 increase in estimated receipts from our Jacksonville, Florida property due to a longer anticipated holding period of the property;

•

a $2,181,000 increase in the liquidation value of our WRT One South State Lender equity investment due to additional interest to be earned on anticipated future loan advances;

•

a $1,707,000 increase in the liquidation value of our 550 Corporetum property located in Lisle, Illinois as a result of new tenant leases, partially offset by a $1,193,000 decrease in estimated receipts at the property due to increased leasing costs and tenant improvements;

•

a $1,551,000 increase in the liquidation value of our WRT-Elad One South State Equity investment due to new lease signings at the property;

•

a $1,053,000 increase in estimated distributions from our Concord Debt Holdings equity investment primarily as a result of the sale of the MSREF hotel assets;

•

a $584,000 increase in the liquidation value of our Cerritos, California office property based on the contract for sale, partially offset by a $302,000 decrease in estimated receipts due to flood damage that occurred prior to the sale of the property; and

•

a $344,000 increase in estimated future distributions from our Atrium Mall equity investment due to a change in the estimated holding period of the investment.

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Primarily offset by:

•

a $6,676,000 decrease in the liquidation value of our Houston, Texas residential property due to unfavorable changes in the Houston real estate market plus a $1,146,000 decrease in estimated receipts due to a change in the anticipated holding period of the property, partially offset by a $1,267,000 corresponding decrease in the liability for non-controlling interest in this property;

•

a $5,339,000 decrease in the liquidation value of our CDH CDO equity investment as a result of a decrease in the estimated underlying collateral value of one of the loan assets held by the venture partially offset by a $1,704,000 increase in estimated future receipts based on the collection of an old receivable;

•

a $1,577,000 decrease in estimated receipts at our Churchill, Pennsylvania property due to a shorter anticipated holding period of the property;

•

a $1,558,000 increase in the estimated fees payable to our advisor over the duration of the liquidation;

•

a $1,143,000 decrease in receipts from our Vintage Housing Holdings equity investment due to a shorter holding period and increased costs associated with the sale; and

•

a $918,000 decrease in the liquidation value of our loan securities resulting from reduced net operating income and a lower appraisal of the underlying collateral.

Critical Accounting Policies and Estimates

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Recently Issued Accounting Standards

None that are applicable to the Trust given the application of liquidation basis accounting.

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FORM 10-Q SEPTEMBER 30, 2015

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ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure to fluctuations in market interest rates. Market interest rates are highly sensitive to many factors beyond our control. Various financial vehicles exist which would allow management to partially mitigate the potential negative effects of interest rate fluctuations on our cash flow and earnings.

Our liabilities include both fixed and variable rate debt. We seek to limit our risk to interest rate fluctuations through match financing on our loan assets.

The table below presents information about the Trust’s derivative financial instruments at September 30, 2015 (in thousands):


Type	Maturity	Strike Rate			Notional Amount of Hedge		Cost of Hedge

Swap	October 2016		0.69	%	$	77,767	$	—
Cap	November 2017		4.00	%		50,000		165
Cap	November 2018		5.00	%		50,000		220

The fair value of our mortgage loans payable and secured financings as of the applicable date, based on discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt, was $223,370,000 and $297,376,000 at September 30, 2015 and December 31, 2014, respectively. The fair value of our Senior Notes outstanding as of the applicable date, based on quoted market prices, was $73,859,000 at December 31, 2014.

The following table shows what the annual effect a change in the LIBOR rate would have on interest expense based upon our variable rate debt at September 30, 2015 taking into consideration the effect of our derivative financial instruments (in thousands):


	Change in LIBOR (2)
	-0.19%			1%		2%		3%

Change in consolidated interest expense	$	(11	)	$	153	$	714	$	1,276
Pro-rata share of change in interest expense of debt on non-consolidated entities (1)		—			2		4		6

(Increase) decrease in net income	$	(11	)	$	155	$	718	$	1,282

(1)	Represents our pro-rata share of a change in interest expense in our 701 Seventh Avenue, Norridge Commons and Edens Center equity investments.

(2)	The one-month LIBOR rate at September 30, 2015 was 0.1930%.

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We may utilize various financial instruments to mitigate the potential negative impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies.

The following table shows what the annual effect a change in the LIBOR rate would have on interest income based upon our variable rate loan assets at September 30, 2015 (in thousands):


	Change in LIBOR (1)
	-0.19%			1%		2%		3%

Change in consolidated interest income	$	(1	)	$	4	$	8	$	13
Pro-rata share of change in interest income of loan assets in non-consolidated entities		—			—		—		—

Increase (decrease) in net income	$	(1	)	$	4	$	8	$	13

(1)	The one-month LIBOR rate at September 30, 2015 was 0.1930%.

Market Value Risk

Our hedge transactions using derivative instruments also involve certain additional risks such as counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates will cause a significant loss of basis in the contract. We believe that there is a low likelihood that these counterparties will fail to meet their obligations. There can be no assurance that we will adequately protect against the foregoing risks.

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FORM 10-Q SEPTEMBER 30, 2015

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ITEM 4.

CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

As of September 30, 2015 an evaluation was performed under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation the CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2015.

Other Matters

There have been no changes in our internal controls over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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FORM 10-Q SEPTEMBER 30, 2015

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PART II.

OTHER INFORMATION

ITEM 6.

EXHIBITS

Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index.

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Trust has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Winthrop Realty Trust

Date: November 6, 2015	By:	/s/ Michael L. Ashner
		Michael L. Ashner
		Chief Executive Officer

Date: November 6, 2015	By:	/s/ John A. Garilli
		John A. Garilli
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015

EXHIBIT INDEX


Exhibit	Description	Page Number

3.1	Second Amended and Restated Declaration of Trust as of May 21, 2009 - Incorporated by reference to Exhibit 3.1 to the Trust’s Quarterly Report on Form 10-Q for the period ended June 30, 2009.	-

3.2	By-laws of Winthrop Realty Trust as amended and restated on November 3, 2009 - Incorporated by reference to Exhibit 3.1 to the Trust’s Current Report on Form 8-K filed November 6, 2009.	-

3.3	Amendment to By-laws - Incorporated by reference to Exhibit 3.1 to the Trust’s Current Report on Form 8-K filed March 6, 2010.	-

4.1	Form of certificate for Common Shares of Beneficial Interest - Incorporated by reference to Exhibit 4.1 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2008.	-

4.2	Agreement of Limited Partnership of WRT Realty L.P., dated as of January 1, 2005 - Incorporated by reference to Exhibit 4.1 to the Trust’s Form 8-K filed January 4, 2005.	-

4.3	Amendment No. 1 to Agreement of Limited Partnership of WRT Realty, L.P., dated as of December 1, 2005 - Incorporated by reference to Exhibit 4.4 to the Trust’s Form 10-K filed March 15, 2012.	-

4.4	Amendment No. 2 to Agreement of Limited Partnership of WRT Realty, L.P., dated as of November 28, 2011 – Incorporated by reference to the Trust’s Form 8-K filed November 28, 2011.	-

4.5	Amendment No. 3 to Agreement of Limited Partnership of WRT Realty, L.P., dated as of March 23, 2012 – Incorporated by reference to the Trust’s Form 8-K filed March 23, 2012	-

4.6	Amended and Restated Certificate of Designations of 9.25% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest - Incorporated by reference to the Trust’s Current Report on Form 8-K filed March 23, 2012.	-

4.7	Form of Specimen Certificate for the 9.25% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest - Incorporated by reference to Exhibit 4.2 to Trust’s Form 8-A filed with the Securities and Exchange Commission on November 23, 2011.	-

10.1	Stock Purchase Agreement between the Trust and FUR Investors, LLC, dated as of November 26, 2003, including Annex A thereto, being the list of Conditions to the Offer - Incorporated by reference to Exhibit 10.1 to the Trust’s Form 8-K filed December 1, 2003.	-

10.2	Third Amended and Restated Advisory Agreement dated February 1, 2013, between the Trust, WRT Realty L.P. and FUR Advisors LLC - Incorporated by reference to Exhibit 10.1 to the Trust’s Current Report on Form 8-K filed February 4, 2013.	-

10.3	Exclusivity Services Agreement between the Trust and Michael L. Ashner - Incorporated by reference to Exhibit 10.4 to the Trust’s Form 8-K filed December 1, 2003.	-

10.4	Amendment No. 1 to Exclusivity Agreement, dated November 7, 2005 - Incorporated by reference to Exhibit 10.7 to the Trust’s Form 8-K filed November 10, 2005.	-

10.5	Amendment No. 2 to Exclusivity Agreement, dated February 1, 2013 - Incorporated by reference to Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed February 4, 2013.	-

WINTHROP REALTY TRUST

FORM 10-Q SEPTEMBER 30, 2015



10.6	Covenant Agreement between the Trust and FUR Investors, LLC - Incorporated by reference to Exhibit 10.5 to the Trust’s Form 8-K filed December 1, 2003.	-

10.7	Amendment No. 1 to Covenant Agreement, dated February 4, 2013 - Incorporated by reference to Exhibit 10.3 to the Trust’s Current Report on Form 8-K filed February 4, 2013.	-

10.8	Winthrop Realty Trust 2007 Long Term Stock Incentive Plan - Incorporated by reference to the Trust’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 30, 2007.	-

10.9	Restricted Share Award Agreement, dated February 1, 2013, between Winthrop Realty Trust and Michael L. Ashner - Incorporated by reference to Exhibit 10.4 to the Trust’s Current Report on Form 8-K filed February 4, 2013.	-

10.10	Restricted Share Award Agreement, dated February 1, 2013, between Winthrop Realty Trust and Carolyn Tiffany - Incorporated by reference to Exhibit 10.4 to the Trust’s Current Report on Form 8-K filed February 4, 2013.	-

31	Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	(1)

32	Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(1)

101.INS	XBRL Report Instance Document	(1)

101.SCH	XBRL Taxonomy Extension Schema Document	(1)

101.CAL	XBRL Taxonomy Calculation Linkbase Document	(1)

101.LAB	XBRL Taxonomy Label Linkbase Document	(1)

101.PRE	XBRL Presentation Label Linkbase Document	(1)

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	(1)

(1)	filed herewith

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