10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

|X| ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 OR

|_| 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 001-12917

WELLSFORD REAL PROPERTIES, INC. (Exact Name of Registrant as Specified in Its Charter)

Maryland	13-3926898
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
535 Madison Avenue, New York, NY	10022
(Address of Principal Executive Offices)	(Zip Code)
(212) 838-3400
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Name of Each Exchange On Which Registered
Common Stock $0.02 par value	American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:	None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES |x|      NO |_|

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 Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.       YES |x|      NO |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |_|

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

Large accelerated filer |_| Accelerated filer |X| Non-accelerated filer |_|

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES |_|      NO|x|

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was approximately $114,700,000 based on the closing price on the American Stock Exchange for such shares on June 30, 2005.

The number of the Registrant's shares of common stock outstanding was 6,471,179 as of March 13, 2006.

Documents Incorporated By Reference

Portions of the Definitive Proxy Statement for the 2006 Annual Shareholders' Meeting are incorporated by reference into Part III.

TABLE OF CONTENTS

Item No.		Page No.
	PART I
1.	Business	3
1A.	Risk Factors	13
1B.	Unresolved Staff Comments	19
2.	Properties	19
3.	Legal Proceedings	20
4.	Submission of Matters to a Vote of Security Holders	20
	PART II
5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
	Equity Securities	21
6.	Selected Financial Data	23
7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
7A.	Quantitative and Qualitative Disclosures about Market Risk	42
8.	Financial Statements and Supplementary Data	43
9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	43
9A.	Controls and Procedures	43
9B.	Other Information	44
	PART III
10.	Directors and Executive Officers of the Registrant	44
11.	Executive Compensation	44
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
	Matters	44
13.	Certain Relationships and Related Transactions	44
14.	Principal Accountant Fees and Services	44
	PART IV
15.	Exhibits and Financial Statement Schedules	44
	FINANCIAL STATEMENTS
15(a).	Consolidated Statement of Net Assets in Liquidation (liquidation basis) at December 31, 2005	F-4
	Consolidated Statement of Changes in Net Assets in Liquidation (liquidation basis) for the Period
	November 18, 2005 to December 31, 2005	F-5
	Consolidated Balance Sheet (going concern basis) at December 31, 2004	F-6
	Consolidated Statements of Operations (going concern basis) for the Period January 1, 2005 to
	November 17, 2005 and for the Years Ended December 31, 2004 and 2003	F-7
	Consolidated Statements of Changes in Shareholders' Equity (going concern basis) for the Period
	January 1, 2005 to November 17, 2005 and for the Years Ended December 31, 2004 and 2003	F-8
	Consolidated Statements of Cash Flows for the Period November 18, 2005 to December 31, 2005
	(liquidation basis), for the Period January 1, 2005 to November 17, 2005 and for the
	Years Ended December 31, 2004 and 2003 (going concern basis)	F-9
	Notes to Consolidated Financial Statements	F-11
	Wellsford/Whitehall Group, L.L.C. Consolidated Financial Statements and Notes	F-47
	FINANCIAL STATEMENT SCHEDULES
	III.        Real Estate and Accumulated Depreciation	S-1

All other schedules have been omitted because the required information for such other schedules is not present, is not present in amounts sufficient to require submission of the schedule or is included in the consolidated financial statements.

2

PART I
Item 1.	Business and Plan of Liquidation.
Wellsford Real Properties, Inc. (and subsidiaries, collectively, the "Company") was formed as a Maryland corporation on January 8, 1997, as a corporate subsidiary of Wellsford Residential Property Trust (the "Trust"). On May 30, 1997, the Trust merged (the "Merger") with Equity Residential ("EQR"). Immediately prior to the Merger, the Trust contributed certain of its assets to the Company and the Company assumed certain liabilities of the Trust. Immediately after the contribution of assets to the Company and immediately prior to the Merger, the Trust distributed to its common stockholders all of the outstanding shares of the Company owned by the Trust. The Company was formed to operate as a real estate merchant banking firm to acquire, develop, finance and operate real properties and invest in private and public real estate companies. At December 31, 2005, the Company's remaining primary operating activities are the development, construction and sale of three residential projects. Previously, the Company's activities had been categorized into three strategic business units ("SBUs") within which it executed its business plans: (i) Commercial Property Activities; (ii) Debt and Equity Activities; and (iii) Residential Activities. During September 2005, the Company ceased its Commercial Property Activities when its equity interest in Wellsford/Whitehall Group, L.L.C. ("Wellsford/Whitehall") was redeemed. On May 19, 2005, the Company's Board of Directors (the "Board") approved the Plan of Liquidation (the "Plan") and on November 17, 2005, the Company's stockholders adopted the Plan. The Plan contemplates the orderly sale of each of the Company's remaining assets, which are either owned directly or through the Company's joint ventures, the collection of all outstanding loans from third parties, the orderly disposition or completion of construction of development properties, the discharge of all outstanding liabilities to third parties and, after the establishment of appropriate reserves, the distribution of all remaining cash to stockholders. The Company currently contemplates that approximately 36 months after the approval of the Plan any remaining assets and liabilities would be transferred into a liquidating trust. The liquidating trust would continue in existence until all liabilities have been settled, all remaining assets have been sold and proceeds distributed and the appropriate statutory periods have lapsed. After the approval of the Plan by the stockholders, the Company completed the sale of its largest asset, the three residential rental phases of its Palomino Park project for $176,000,000. On December 14, 2005, the Company made the initial liquidating distribution of $14.00 per share, aggregating approximately $90,597,000, to its stockholders. For all periods preceding stockholder approval of the Plan on November 17, 2005, the Company's financial statements are presented on the going concern basis of accounting. As required by generally accepted accounting principles, the Company adopted the liquidation basis of accounting as of the close of business on November 17, 2005. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted as appropriate. The following paragraphs summarize certain of the material actions and events which have occurred regarding the Plan and certain decisions of the Board. In March 2004, the Company reported that the Board authorized and retained the financial advisory firm, Lazard Ltd, to advise the Company on various strategic financial and business alternatives available to it to maximize stockholder value. Such alternatives included a recapitalization, acquisitions, disposition of assets, liquidation, the sale or merger of the Company and other alternatives that would keep the Company independent. On May

3

19, 2005, after consideration of the alternatives available, the Company announced that its Board approved the Plan.

In March 2005, the Board authorized the marketing of the three residential rental phases of Palomino Park. In the second quarter of 2005, the Company engaged a broker to market these phases. In August 2005, the Company entered into an agreement to sell these phases for $176,000,000, subject to, among other things, stockholder approval of the Plan. The sale closed on November 22, 2005.

The following transactions, which are consistent with the intent of the Plan, occurred prior to the November 17, 2005 adoption of the Plan by the stockholders: (i) in September 2005, the Company's interest in its Wellsford/Whitehall joint venture was redeemed for approximately $8,300,000, (ii) by May 2005, the Company retired $12,680,000 of tax exempt bond financing, (iii) in April 2005, the Company redeemed its outstanding $25,775,000 of Convertible Junior Subordinated Debentures (the "Debentures") and (iv) in November 2004, the Company received $15,000,000 for its interest in a joint venture which purchased debt instruments ("Second Holding").

On October 3, 2005, the Board met to review with management the cash distributions which the Company expected stockholders to receive in connection with the Plan in view of the recent redemption of the Company's interest in Wellsford/Whitehall, the impending sale of the three residential rental phases of Palomino Park and the recent decision for the Company to continue to incur the costs of operating as a public company through the liquidation period. As a result of the foregoing factors, the Board determined to increase by $0.50 per share, the range for the aggregate cash distributions it expects stockholders will receive as a result of the Plan from the previously announced range of $18.00 to $20.50 per share to $18.50 and $21.00 per share. The Board also estimated that the initial liquidating distribution would be $14.00 per share, which was at the high end of the previously estimated range of $12.00 and $14.00 per share. The initial liquidating distribution of $14.00 per share was made on December 14, 2005 to stockholders of record on December 2, 2005.

At December 31, 2005, the Company reported in the accompanying financial statements that its net assets in liquidation aggregated $56,569,000, or $8.74 per share based upon 6,471,179 common shares outstanding at December 31, 2005. This amount presents development projects at estimated net realizable value after giving effect to the discounting of estimated net proceeds therefrom. All other assets are presented at estimated net realizable value on an undiscounted basis. The amount also includes a reserve for future estimated general and administrative expenses and other costs during the liquidation. Estimated net realizable value reflects economic changes and various other changed circumstances over recent months. There can be no assurance that these estimated values will be realized. Such amount should not be taken as an indication of the timing or amount of future distributions to be made by the Company (see Management's Discussion and Analysis for the Liquidation Basis of Accounting disclosure).

The timing and amount of interim liquidating distributions (if any) and final liquidating distributions will depend on the timing and amount of proceeds the Company will receive upon the sale of the remaining assets and the extent to which reserves for current or future liabilities are required. Accordingly, there can be no assurance that there will be any liquidating distributions prior to a final liquidating distribution.

The Company's executive offices are located at 535 Madison Avenue, New York, New York, 10022; telephone, (212) 838-3400; web address, www.wellsford.com; e-mail, wrpny@wellsford.com. To access the Company's other documents filed with the Securities and Exchange Commission ("SEC"), visit www.wellsford.com. The Company had 16 employees as of December 31, 2005.

Commercial Property Activities

The Company's primary commercial property activities and its sole activity in this SBU consisted of its interest in Wellsford/Whitehall, a joint venture by and among the Company, various entities affiliated with Whitehall Funds ("Whitehall") and private real estate funds sponsored by The Goldman Sachs Group, Inc. ("Goldman

4

Sachs"). The Company's interest in Wellsford/Whitehall was 35.21% at December 31, 2004. The managing member ("WP Commercial") was a Goldman Sachs and Whitehall affiliate.

Wellsford/Whitehall was originally organized as a private real estate operating company which leased and re-leased space, performed construction for tenant improvements, expanded buildings, re-developed properties and based on general and local economic conditions and specific conditions in the real estate industry, sold properties for an appropriate price.

In September 2005, the Company ceased its Commercial Property Activities when its equity interest in Wellsford/Whitehall was redeemed for approximately $8,300,000 plus certain modest contingent payments to be received in the future. Approximately $141,000 was received in December 2005. The Company realized an aggregate gain on the redemption of its interests of $5,986,000 in 2005. The Company does not expect to receive any additional payments from its investment in Wellsford/Whitehall. At the time of the redemption in September 2005, Wellsford/Whitehall owned one 129,000 square foot office building and a parcel of land, both located in New Jersey.

The Company's investment in Wellsford/Whitehall, which was accounted for on the equity method, was approximately $4,229,000 at December 31, 2004.

Since the beginning of 2001, Wellsford/Whitehall has completed the following number of property sales or transfers:

Year	Number of Properties
2005	15
2004	8
2003	11
2002	1
2001	11

In May 2005, Wellsford/Whitehall completed the sale of a 147,000 square foot building in Ridgefield Park, New Jersey, for $31,400,000. Approximately $10,500,000 of the net proceeds and $8,000,000 of restricted cash were used to retire all outstanding mortgage indebtedness, leaving Wellsford/Whitehall without any mortgage debt. Wellsford/Whitehall reported a gain of approximately $10,100,000 on this transaction, of which the Company's share was approximately $3,500,000.

In April 2005, Wellsford/Whitehall completed the sale of a 212,000 square foot building in Needham, Massachusetts, for $37,500,000. Approximately $18,400,000 of the net proceeds were used to pay existing debt. Wellsford/Whitehall reported a gain of approximately $7,000,000 on this transaction, of which the Company's share was approximately $2,500,000.

In January 2005, Wellsford/Whitehall completed the sale of a portfolio of seven office properties and a land parcel for approximately $72,000,000, after selling and other costs. The properties, which aggregate approximately 1,231,000 square feet, are all located in New Jersey. Substantially all of the net proceeds from the sale and unrestricted cash and certain related reserve funds aggregating approximately $5,000,000, were used to retire existing debt. Additionally, in January 2005, Wellsford/Whitehall completed the sale of five retail stores for an aggregate sales price of $17,100,000, after selling costs. The net proceeds from the sale of the retail stores of approximately $1,300,000, after payment of related debt, were available to be used by Wellsford/Whitehall for working capital purposes. During the fourth quarter of 2004, Wellsford/Whitehall recorded an impairment loss provision of approximately $21,069,000 relating to the January 2005 sales (of which the Company's share was approximately $7,419,000).

During July 2004, Wellsford/Whitehall completed a transaction whereby it transferred six of its Massachusetts properties (aggregating 891,000 square feet), which were subject to mortgage debt of approximately $64,200,000 along with a land parcel, related restricted cash balances aggregating $6,428,000, cash and certain other

5

consideration to a newly formed partnership which includes the New England family (the "Family") that, at that time, owned an aggregate 7.45% equity interest in Wellsford/Whitehall (the "Family Partnership"), in redemption of the Family's equity interests in Wellsford/Whitehall (the "Redemption Transaction"). As a result of this transaction, Wellsford/Whitehall recorded a loss of approximately $4,306,000 during the third quarter of 2004, of which the Company's share was approximately $1,403,000. At the time of the Redemption Transaction, there was an elimination of an existing tax indemnity which Wellsford/Whitehall had to the Family's members. The economic effect of this tax indemnity restricted most future asset sales through 2007 and required a minimum amount of non-recourse debt on Wellsford/Whitehall's balance sheet; such restrictions no longer remained and Wellsford/Whitehall was allowed to proceed with its sales program as described above.

During 2003, the Company's share of impairment provisions recorded by Wellsford/Whitehall amounted to $37,377,000. In addition, the Company wrote off $2,644,000 of related unamortized warrant costs on its books in 2003.

WP Commercial provided management, construction, development and leasing services to Wellsford/Whitehall based on an agreed upon fee schedule. WP Commercial received an administrative management fee of 93 basis points on a predetermined value for each asset in the Wellsford/Whitehall portfolio. As Wellsford/Whitehall sold assets, the basis used to determine the fee was reduced by the respective asset's predetermined value six months after the completion of such sales. During the years ended December 31, 2005, 2004 and 2003, respectively, Wellsford/Whitehall paid the following fees to WP Commercial or one of its affiliates, including amounts reflected in discontinued operations of Wellsford/Whitehall:

	For the Years Ended December 31,
	2005		2004		2003
Administrative management	$	1,834,000	$	3,715,000	$	4,604,000
Construction, construction management,
development and leasing	$	75,000	$	784,000	$	1,925,000
Financing fee	$	750,000	$	--	$	--

Whitehall paid the Company fees with respect to assets disposed of by Wellsford/Whitehall and for certain acquisitions of real estate made by certain other affiliates of Whitehall. Such fees aggregated $518,000, $46,000 and $430,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

Debt and Equity Activities

The Company, through the Debt and Equity Activities SBU, primarily made debt investments directly, or through joint ventures, predominantly in real estate related assets and investments.

At December 31, 2005, the Company, on the liquidation basis of accounting, had the following investments in the Debt and Equity Activities SBU: (i) approximately $453,000 in Clairborne Fordham, a company initially organized to provide $34,000,000 of mezzanine construction financing for a high-rise condominium project in Chicago, which currently owns and is selling the remaining two unsold residential units ("Clairborne Fordham"); (ii) approximately $20,000,000 for Reis, Inc. ("Reis"), a real estate information and database company; and (iii) approximately $666,000 in a company organized to purchase land parcels for rezoning, subdivision and creation of environmental mitigation credits ("Wellsford Mantua").

Debt Investments

The following table presents information regarding the Company's debt investments, none of which were outstanding at December 31, 2005:

6

		Balance at December 31,				Annual Interest		Stated Maturity	Prepayment	Interest Revenue for the Years Ended December 31,
	Collateral	2005		2004		Rate		Date	Date	2005		2004		2003
Guggenheim								December	September
Loan	(A)	$	--	$	1,032,000		8.25%	2005	2005	$	58,000	$	173,000	$	259,000
277 Park									September
Loan	(B)	$	--	$	--		12.00%	May 2007	2003	$	--	$	--	$	6,643,000	(C)

(A)	The loan represented the balance of proceeds from a sale of a 4.2% interest in The Liberty Hampshire Company, L.L.C.
	("Liberty Hampshire"). The loan was secured by partnership interests in Guggenheim.
(B)	Secured by a pledge of equity interests in the entity which owned a 1,750,000 square foot office property in midtown
	Manhattan, New York.
(C)	Includes a yield maintenance penalty of $4,368,000.

Equity Investments

Second Holding

Second Holding is a special purpose finance company, organized to purchase investment and non-investment grade rated real estate debt instruments and investment grade rated other asset-backed securities. The other asset-backed securities that Second Holding purchased may have been secured by, but not limited to, leases on aircraft, truck or car fleets, bank deposits, leases on equipment, fuel/oil receivables, consumer receivables, pools of corporate bonds and loans and sovereign debt. It was Second Holding's intent to hold all securities to maturity. Many of the securities owned by Second Holding were obtained through private placements.

The Company's initial net contribution to Second Holding was approximately $24,600,000 to obtain an approximate 51.09% non-controlling interest in Second Holding, with Liberty Hampshire owning 10% and an affiliate of a significant shareholder of the Company, the Caroline Hunt Trust Estate, (which owns 405,500 shares of the Company at December 31, 2005 and 2004 ("Hunt Trust")) together with other Hunt Trust related entities, owning the remaining approximate 39% interest.

During the latter part of 2000, an additional partner was admitted to the venture who committed to provide credit enhancement. The parent company of this partner announced during 2003 that its subsidiary (the partner of Second Holding) would no longer write new credit enhancement business, however, it would continue to support its existing book of credit enhancement business. This partner was entitled to 35% of net income as defined by agreement, while the other partners, including the Company, shared in the remaining 65%. The Company's allocation of income was approximately 51.09% of the remaining 65%.

During the second quarter of 2004, the partner providing the credit enhancement requested that the management of Second Holding not purchase any further long-term investments and Second Holding accordingly suspended such acquisitions. During the third quarter of 2004, the partners evaluated alternatives available to Second Holding in addition to holding existing assets through respective maturities and then retiring related debt. As a consequence of not purchasing additional assets, operating income, fees earned and cash flows received by the Company from such fees declined during 2004.

In November 2004, the Company completed the sale of its interest in Second Holding for $15,000,000 in cash. Since the Company was willing to entertain and execute an agreement at this price, and based upon the evaluation of other alternatives, the Company determined it was appropriate, under the accounting literature for equity method investees, to record a $9,000,000 impairment charge to the carrying amount of its investment in Second Holding during the third quarter of 2004.

The Company accounted for its investment in Second Holding on the equity method of accounting as its interests were represented by two of eight board seats with one-quarter of the vote on any major business decisions. The Company's investment was approximately $29,167,000 at December 31, 2003. The Company's share of (loss) income from Second Holding's operations was approximately $(4,790,000) and $1,640,000 for the eleven months ended November 30, 2004 (date of sale) and for the year ended December 31, 2003. The loss in the year ended December 31, 2004 is the result of a $12,930,000 net impairment charge taken by Second

7

Holding (of which the Company's share was $6,606,000) related to the write-down of one of its investments during the first quarter of 2004, offset by a partial recovery when the investment was sold in the second quarter of 2004. The net fees earned by the Company, which were based upon total assets of Second Holding, amounted to approximately $751,000 and $930,000 for the years ended December 31, 2004 and 2003, respectively. Clairborne Fordham

In October 2000, the Company and Prudential Real Estate Investors ("PREI"), an affiliate of Prudential Life Insurance Company, organized Clairborne Fordham, a venture in which the Company has a 10% interest. The Company's investment in Clairborne Fordham, which is accounted for on the equity method, was approximately $453,000 (liquidation basis) and approximately $2,190,000 (going concern basis) at December 31, 2005 and 2004, respectively.

Upon its organization, Clairborne Fordham provided an aggregate of $34,000,000 of mezzanine construction financing (the "Mezzanine Loan") for the construction of Fordham Tower, a 50-story, 227 unit, luxury condominium apartment project to be built on Chicago's near northside ("Fordham Tower"). The Mezzanine Loan, which matured in October 2003, bore interest at a fixed rate of 10.50% per annum with provisions for additional interest to PREI and the Company and was secured by a lien on the equity interests of the owner of Fordham Tower. The Company could earn fees from PREI's additional interest based upon certain levels of returns on the project. Such additional interest had not been accrued by the Company or Clairborne Fordham through the maturity of the Mezzanine Loan, nor had any fees been accrued by the Company.

The Mezzanine Loan was not repaid at maturity and as of October 2003, an amended loan agreement was executed. The amended terms provided for extending the maturity to December 31, 2004, the placement of a first mortgage lien on the project, no interest to be accrued after September 30, 2003 and for the borrower to add to the existing principal amount the additional interest due Clairborne Fordham at September 30, 2003 of approximately $19,240,000. In lieu of interest after September 30, 2003, Clairborne Fordham was to participate in certain additional cash flows, as defined, if earned from net sales proceeds of the Fordham Tower project.

The amended loan agreement provided for a $3,000,000 additional capital contribution by the borrower and use of an existing cash collateral account to pay off an existing construction loan and any unpaid construction costs. Also, the amended loan agreement provided for an initial principal payment and all proceeds after project costs to be first applied to payment in full of the loan and the additional interest to Clairborne Fordham before any sharing of project cash flow with the borrower. Payments of $5,125,000 and $7,823,000 were made to Clairborne Fordham during the fourth quarter of 2003 and for the period January 1, 2004 to September 15, 2004, respectively, of which the Company's share was $510,000 and $782,000, respectively.

On September 15, 2004, Clairborne Fordham executed an agreement with the owners of Fordham Tower pursuant to which Clairborne Fordham obtained title to the remaining unsold components of the project (which at that time included 18 unsold residential units, the 188 space parking garage and 12,000 square feet of retail space). Additionally, Clairborne Fordham agreed to distribute the first $2,000,000 of sale proceeds to the former owner. No gain or loss was recognized by Clairborne Fordham or the Company as a result of the transfer. During the period September 15, 2004 to December 31, 2004, Clairborne Fordham sold the retail space and three residential units and realized approximately $8,677,000 of net proceeds before the $2,000,000 payment to the former owner. Clairborne Fordham distributed approximately $5,655,000 to the venture members including approximately $566,000 to the Company during the period September 15, 2004 to December 31, 2004. Undistributed proceeds were retained by Clairborne Fordham for working capital purposes. During the year ended December 31, 2005, Clairborne Fordham sold the parking garage and 13 residential units for aggregate net proceeds of approximately $26,812,000, of which approximately $2,645,000 was distributed to the Company during 2005. Clairborne Fordham intends to continue the orderly sale of the remaining two residential units in 2006.

The following table details the Company's share of income from Clairborne Fordham:

8

	For the Period January 1 to November 17,		For the Years Ended December 31,
	2005		2004		2003
Contractual interest from Mezzanine Loan	$	--	$	--	$	269,000
Additional interest income pursuant to the October
2003 amended loan agreement		--		314,000		136,000
Net income from sales of components and operations
subsequent to the September 15, 2004 transaction		702,000		198,000		--
	$	702,000	$	512,000	$	405,000

Other Investments

Reis, Inc.

The Company has direct and indirect equity investments in Reis, a real estate information and database company, which provides real estate market information to institutional investors. At December 31, 2005, the carrying amount of the Company's aggregate investment in Reis was approximately $20,000,000 (liquidation basis - see below). The investment represents approximately 21% of Reis' equity on an as converted basis at December 31, 2005. Such investment, which had previously been accounted for on a cost basis, amounted to approximately $6,790,000 at December 31, 2004. The adjustment to report Reis at estimated net realizable value is reflected in the adjustment to net realizable value of $72,485,000 on the Consolidated Statement of Changes in Net Assets in Liquidation. The president and primary common shareholder of Reis is the brother of Mr. Lynford, the Chairman, President and Chief Executive Officer of the Company. Mr. Lowenthal, the Company's former President and Chief Executive Officer, who currently serves on the Company's Board, has served on the board of directors of Reis since the third quarter of 2000. Messrs. Lynford and Lowenthal have and will continue to recuse themselves from any investment decisions made by the Company pertaining to Reis.

As of March 13, 2006, Reis is currently considering offers from potential purchasers ranging between $90,000,000 and $100,000,000 to acquire 100% of its stock. Based on these offers, in estimating the net realizable value for its investment in Reis, the Company utilized $90,000,000 of net proceeds in valuing Reis. If Reis is sold at that amount, the Company will receive approximately $20,000,000 of proceeds, subject to escrow holdbacks. While these potential sale proceeds are now reflected in the Company's net realizable value presentation, there is no assurance that this transaction will be consummated. There is no assurance that if this current transaction is not consummated that Reis will sell the company to another party at the same price or at all.

Value Property Trust

During 2004 and 2003, the Company sold the remaining properties acquired as part of the February 1998 merger with Value Property Trust ("VLP"). In July 2003, the Salem, New Hampshire property was sold for a net sales price of approximately $4,200,000 and the Company utilized $22,000 of an existing impairment reserve recorded in 2000. During April 2004, the Company sold the Philadelphia, Pennsylvania property for net proceeds of approximately $2,700,000. As a result of the sale of the Philadelphia, Pennsylvania property, the Company reversed approximately $625,000 of impairment reserves recorded in 2000. During June 2004, the Company recognized approximately $184,000 of proceeds which had been placed in escrow from the sale of the Salem, New Hampshire property, as a result of the expiration of a contingency period. The contingent proceeds and the reversal of the impairment reserve were reflected in income from discontinued operations during the second quarter of 2004 and the year ended December 31, 2004. These transactions were the completion of the sales process of the VLP properties owned by the Company.

9

Wellsford Mantua

During November 2003, the Company made an initial $330,000 investment in the form of a loan, in a company organized to purchase land parcels for rezoning, subdivision and creation of environmental mitigation credits. The loan is secured by a lien on a leasehold interest in a 154 acre parcel in West Deptford, New Jersey which includes at least 64.5 acres of wetlands and a maximum of 71 acres of developable land. The Company consolidates Wellsford Mantua at December 31, 2005 and 2004. The Company's investment in Wellsford Mantua was approximately $666,000 (liquidation basis) and approximately $533,000 (going concern basis) at December 31, 2005 and 2004, respectively.

Residential Activities

Palomino Park

The Company has been the developer and managing owner of Palomino Park, a five phase, 1,707 unit multifamily residential development in Highlands Ranch, a southern suburb of Denver, Colorado. Three phases (Blue Ridge, Red Canyon and Green River) aggregating 1,184 units were operated as rental property until they were sold in November 2005 (see below). The 264 unit Silver Mesa phase was converted into condominiums (sales commenced in February 2001 and by August 2005 the Company had sold all 264 units). The Gold Peak phase is under construction as a 259 unit for-sale condominium project. At December 31, 2005, the Company had a 92.925% interest in the final phase of Palomino Park and a subsidiary of EQR owned the remaining 7.075% interest. At December 31, 2004, the Company's interest was 85.85% and EQR's interest was 14.15%.

With respect to EQR's 14.15% interest at December 31, 2004 in the corporation that owns Palomino Park, there existed a put/call option between the Company and EQR related to one-half of such interest (7.075%). In February 2005, the Company informed EQR of its intent to exercise this option at a purchase price of $2,087,000. This transaction was completed in October 2005. Aggregate distributions from the subsidiary corporation's available cash and sales proceeds of approximately $4,080,000 were made to EQR during 2005.

In November 2005, the Company sold the Blue Ridge, Red Canyon and Green River rental phases for $176,000,000 to a national financial services organization and realized a gain of approximately $57,202,000 after EQR's interest, specific bonuses paid to executives of the Company related to the sale and estimated state and Federal taxes. This amount is reflected in the adjustment to net realizable value of $72,485,000 on the Consolidated Statement of Changes in Net Assets in Liquidation. The Company repaid an aggregate of approximately $94,035,000 of mortgage debt and paid approximately $4,600,000 of debt prepayment costs from the sale proceeds, among other selling costs.

In December 1995, the Trust marketed and sold $14,755,000 of tax-exempt bonds to fund construction at Palomino Park (the "Palomino Park Bonds"). Initially, all five phases of Palomino Park were collateral for the Palomino Park Bonds. The Palomino Park Bonds had an outstanding balance of $12,680,000 at December 31, 2004 and were collateralized by four phases at Palomino Park. In January 2005, the Palomino Park Bonds were paid down by $2,275,000 in order to release the Gold Peak phase from the bond collateral. A five-year letter of credit from Commerzbank AG had secured the Palomino Park Bonds and a subsidiary of EQR had guaranteed Commerzbank AG's letter of credit. The Company retired the $10,405,000 balance of this obligation prior to the expiration of the letter of credit and EQR's guarantee in May 2005.

In December 1997, Phase I, the 456 unit phase known as Blue Ridge, was completed at a cost of approximately $41,600,000. At that time, the Company obtained a $34,500,000 permanent loan (the "Blue Ridge Mortgage") secured by a first mortgage on Blue Ridge. The Blue Ridge Mortgage had a maturity of December 2007 and bore interest at a fixed rate of 6.92% per annum. Principal payments were based on a 30-year amortization schedule.

In November 1998, Phase II, the 304 unit phase known as Red Canyon, was completed at a cost of approximately $33,900,000. At that time, the Company acquired the Red Canyon improvements and the related

10

construction loan was repaid with the proceeds of a $27,000,000 permanent loan (the "Red Canyon Mortgage") secured by a first mortgage on Red Canyon. The Red Canyon Mortgage had a maturity of December 2008 and bore interest at a fixed rate of 6.68% per annum. Principal payments were based on a 30-year amortization schedule.

In October 2000, Phase III, the 264 unit phase known as Silver Mesa, was completed at a cost of approximately $44,200,000. The Company made the strategic decision to convert Silver Mesa into condominium units and sell them to individual buyers. In conjunction with this decision, the Company prepared certain units to be sold and continued to rent certain of the remaining unsold units during the sell out period until the inventory available for sale had been significantly reduced and additional units were required to be prepared for sale. The Company made a payment of $2,075,000 to reduce the outstanding balance on the tax-exempt bonds in order to obtain the release of the Silver Mesa phase from the Palomino Park Bond collateral and obtained a $32,000,000 loan which was collateralized by the unsold Silver Mesa units and matured in December 2003 (the "Silver Mesa Conversion Loan"). During May 2003, the Company repaid the remaining unpaid principal balance of the Silver Mesa Conversion Loan with proceeds from Silver Mesa unit sales and available cash.

Sales of condominium units at the Silver Mesa phase of Palomino Park commenced in February 2001 and by August 2005 all of the 264 units were sold. The following table provides information regarding sales of Silver Mesa units:

	For the Years Ended December 31,										Project
	2005		2004		2003		2002		2001		Totals
Number of units sold		2		53		56		48		105		264
Gross proceeds	$	488,000	$	12,288,000	$	12,535,000	$	10,635,000	$	21,932,000	$	57,878,000
Principal paydown on Silver
Mesa Conversion Loan	$	--	$	--	$	4,318,000	$	9,034,000	$	18,648,000	$	32,000,000

As the Company sold Silver Mesa units, rental revenue, the corresponding operating expenses and cash flow from the units being rented diminished. Rental revenue from the Silver Mesa phase was approximately $51,000 and $702,000 for the years ended December 31, 2004 and 2003, respectively.

In December 2001, Phase IV, the 424 unit phase known as Green River, was completed at a cost of approximately $56,300,000. In February 2003, the Company obtained a $40,000,000 permanent loan secured by a first mortgage on Green River (the "Green River Mortgage"). The Green River Mortgage had a maturity of March 2013 and bore interest at a fixed rate of 5.45% per annum. Principal payments were based on a 30-year amortization schedule. The proceeds of the Green River Mortgage were used to repay the construction loan for the Green River phase.

In 2004, the Company commenced the development of the final phase of Palomino Park known as Gold Peak. Gold Peak will be comprised of 259 condominium units to be built in three sections on the remaining 29 acre land parcel at Palomino Park. At December 31, 2005, there were 84 Gold Peak units under contract with nominal down payments. Gold Peak unit sales commenced in January 2006.

In April 2005, the Company obtained development and construction financing for Gold Peak in the aggregate amount of approximately $28,800,000, which bears interest at LIBOR + 1.65% per annum and mature in November 2006 with respect to the development loan and in November 2009 with respect to the construction loan, both of which have additional extension options upon satisfaction of certain conditions being met by the borrower (the "Gold Peak Mortgage"). The balance of the Gold Peak Mortgage was approximately $11,575,000 at December 31, 2005. Principal repayments will be made as units are sold. The Company has purchased a 5% LIBOR cap expiring in June 2008 for this loan.

11

Other Developments

East Lyme

The Company has a 95% ownership interest as managing member of a venture which owns 101 single family home lots situated on 139 acres of land in East Lyme, Connecticut upon which it is constructing houses for sale ("East Lyme"). The Company purchased the land for $6,200,000 in June 2004. During the fourth quarter of 2005, the model home was completed. The completion of additional homes and closings of initial sales are expected to occur in 2006.

After purchasing the land, the Company executed an agreement with a homebuilder (the "Homebuilder") who will construct and sell the homes for this project and is a 5% partner in the project along with receiving other consideration. The Company extended a loan to the Homebuilder of $157,500 at a rate of 6% per annum which was used by the Homebuilder to finance one-half of his 5% investment in East Lyme. The loan matures upon the termination of the development agreement.

The Company obtained construction financing in the aggregate amount of $21,177,000 (to be drawn upon as costs are expended), which bears interest at LIBOR + 2.15% per annum and matures in December 2007 with two one-year extensions at the Company's option upon satisfaction of certain conditions being met by the borrower (the "East Lyme Construction Loan"). The balance of the East Lyme Construction Loan was approximately $7,226,000 and $361,000 at December 31, 2005 and 2004, respectively. The Company has purchased a 4% LIBOR cap expiring July 2007 for this loan.

The Company executed an option to purchase from the seller of the initial East Lyme land parcel a contiguous parcel of land which can be used to develop 60 single family homes and subsequently acquired the parcel in November 2005 for $3,720,000, including future costs which were the obligation of the seller (the "East Lyme Land"). The East Lyme Land requires remediation of pesticides used on the property when it was an apple orchard, the cost of which has been considered in evaluating the carrying amount of the property at December 31, 2005.

Claverack

The Company has a 75% ownership interest in a joint venture ("Claverack") that owns two land parcels aggregating approximately 300 acres in Claverack, New York. The Company acquired its interest in the joint venture for $2,250,000 in November 2004. One land parcel is subdivided into seven single family home lots on approximately 65 acres upon which Claverack intends to build and sell custom designed homes. The remaining 235 acres, known as The Stewardship, are currently subdivided into six single family home lots with the intent to obtain an increase in the number of developable residential lots to 49 lots, improve the land, obtain construction financing and construct and sell single family homes. The completion of initial homes and closings of initial sales are expected to occur in 2007.

Claverack is capitalized with $3,000,000 of capital, the Company's share of which was contributed in cash and the 25% partner's contribution was the land, subject to liabilities, at a net value of $750,000. The land was subject to a $484,000 mortgage which was assumed by the joint venture (the balance of this mortgage was $465,000 at December 31, 2004, bore interest at a rate of 7% per annum and had a maturity of February 2010 (the "Claverack Mortgage")). At the closing, an aggregate of approximately $866,000 owed to affiliates of the 25% partner was paid from the amount contributed by the Company.

In December 2005, Claverack obtained a line of credit construction loan in the aggregate amount of $2,000,000 which was used to retire the Claverack Mortgage and will be used to construct a custom design model home during 2006 until permanent construction financing is obtained (the "Claverack Construction Loan"). The Claverack Construction Loan bears interest at LIBOR + 2.20% per annum and matures in December 2006 with a six month extension at the Company's option upon satisfaction of certain conditions being met by the borrower. The balance of the Claverack Construction Loan was approximately $449,000 at December 31, 2005.

12

On January 13, 2006, the Claverack partners contributed additional capital aggregating approximately $701,000, of which the Company's share was approximately $526,000.

Beekman

In February 2005, the Company acquired a 10 acre parcel in Beekman, New York for a purchase price of $650,000. The Company also entered into a contract to acquire a contiguous 14 acre parcel, the acquisition of which was conditioned upon site plan approval to build a minimum of 60 residential condominium units (collectively, "Beekman"). The Company's $300,000 deposit in connection with this contract was secured by a first mortgage lien on the property.

As a result of various uncertainties including that the governmental approval and development processes may take an indeterminate period and extend beyond December 31, 2008, the Board authorized the sale of the Beekman interests to the Company's Chairman and former President, or a company in which they have ownership interests, at the greater of the Company's costs or appraised values. On January 27, 2006, a company which is owned by Messrs. Lynford and Lowenthal, the principal of the Company's joint venture partner in the East Lyme project and others acquired the Beekman project at the Company's aggregate cost of approximately $1,297,000. This was accomplished through a sale of the entities that owned the Beekman project.

Segment Financial Information

See Footnote 11 to the Company's consolidated financial statements for additional information regarding the Company's segments.

Item 1A.

Risk Factors.

An investment in our common stock involves a high degree of risk. The risks can generally be divided into three categories: risks relating to the Plan; risks relating to our properties and assets; and risks relating to our organization and structure. In addition to other information contained or incorporated into this Form 10-K, the following is a discussion of the risk factors that we believe are material at this time. These risks and uncertainties are not the only ones facing us and there may be additional matters that we are unaware of or that we currently consider immaterial. All of these could adversely affect our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders pursuant to the Plan. Risks related to the Plan Following the approval of the Plan by our stockholders on November 17, 2005, we completed the sale of our largest asset, the three residential rental phases of Palomino Park for $176,000,000 and on December 14, 2005, made an initial liquidating distribution of $14.00 per share to our stockholders. We cannot assure our stockholders of the timing, nature or amount of any further liquidating distributions. If our stockholders believe that we will be unable to complete our Plan in a timely manner or if liquidating distributions do not meet current estimates, the market price of our common stock may decline. Further, if we make additional liquidating distributions to our stockholders, our stock price will decline and our common shares will likely become less liquid. As a result of the adoption of the Plan, our basis of accounting has changed from the going-concern basis to that of the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted as appropriate. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amounts represent estimates, based on present facts and circumstances, of the net realizable value of assets and the costs associated with carrying out the Plan and

13

dissolution based on certain assumptions. At December 31, 2005, the Company reported in the accompanying financial statements that its net assets in liquidation aggregated $56,569,000, or $8.74 per share based upon 6,471,179 common shares outstanding at December 31, 2005. The actual values and costs associated with carrying out the Plan are expected to differ from this amount because of the inherent uncertainty and will be greater than or less than the amounts recorded. Such differences may be material. In particular, the estimates of the Company's costs will vary with the length of time it operates. In addition, the estimate of net assets in liquidation in the accompanying Statement of Net Assets in Liquidation does not incorporate a present value discount except for projects under development. Accordingly, it is not possible to predict the aggregate amount which will ultimately be distributable to stockholders and no assurance can be given that the aggregate amount of liquidating distributions will equal or exceed the estimate of net assets in liquidation presented in the accompanying Statement of Net Assets in Liquidation or the price or prices at which the Company's common stock has traded or is expected to trade in the future.

Generally, equity and debt real estate investments are relatively difficult to buy and sell quickly. In addition, as a result of the adoption of the Plan, potential purchasers of our assets may try to take advantage of our liquidation process and offer less-than-optimal prices for our assets. We cannot predict how these factors and changes in local real estate markets and the national economy or other factors may affect the prices that we can obtain from the sales of single family homes and condominiums in the liquidation process or the timing of such sales.

The actual amount available for liquidating distributions to our stockholders could be more or less than anticipated or could be delayed, depending on a number of other factors including (i) unknown liabilities or claims, (ii) unexpected or greater or lesser than expected expenses, and (iii) greater or lesser than anticipated net proceeds of asset sales. In addition, if we sold the land at East Lyme to another developer, or our joint venture interest in Claverack to our partner in that venture, the net proceeds from such a sale or sales may be less than the net proceeds that could have been received from the sale of completed residential units.

The timing and amount of interim liquidating distributions (if any) and final liquidating distributions will depend on the timing and amount of proceeds the Company will receive upon the sale of the remaining assets and the extent to which reserves for current or future liabilities are required. Accordingly, there can be no assurance that there will be any liquidating distributions prior to a final liquidating distribution. Subsequent liquidating distributions could be made after the Company has been dissolved and its assets and liabilities have been transferred to a liquidating trust.

The Board may abandon the Plan without further stockholder approval. Furthermore, the Board may modify the Plan as necessary, but any material amendment requires stockholder approval. Thus, we may decide to conduct the liquidation differently than as previously described, to the extent we are permitted to do so by Maryland law.

Historically, our stock has been thinly traded. In the absence of an active public trading market, an investor may be unable to sell his or her common shares. Moreover, as a result of the adoption of the Plan, our common shares may no longer be eligible for listing on the American Stock Exchange ("AMEX"). Being delisted by the AMEX would further decrease the market demand and liquidity for, and price of, our common shares.

Under Maryland law, certain obligations or liabilities imposed by law on our stockholders, directors, or officers cannot be avoided by the dissolution of a company. For example, if we make liquidating distributions to our stockholders without making adequate provisions for payment of creditors' claims, our stockholders would be liable to the creditors to the extent of the unlawful distributions. The liability of any stockholder is, however, limited to the amounts previously received by such stockholder from us (and from any liquidating trust). Accordingly, in such event, a stockholder could be required to return all liquidating distributions previously made to such stockholder and a stockholder could receive nothing from us under the Plan. Moreover, in the event a stockholder has paid taxes on amounts previously received as a liquidating distribution, a repayment of all or a portion of such amount could result in a stockholder incurring a net tax cost if the stockholder's repayment of an amount previously distributed does not cause a commensurate reduction in taxes payable. Therefore, to the extent that we have underestimated the size of our contingency reserve and liquidating

14

distributions to our stockholders have already been made, our stockholders may be required to return some or all of such liquidating distributions. We intend to close our transfer books on the date on which we file Articles of Dissolution with the State Department of Assessments and Taxation of Maryland (the "Final Record Date"). The Final Record Date is currently anticipated to be approximately 36 months after the approval of the Plan by our stockholders, which occurred on November 17, 2005, or such other time as our Board transfers all of our remaining assets into a liquidating trust. At that time, your common shares in the Company will be converted to interests in a liquidating trust which are likely to be non-transferable except in certain limited circumstances. At any time, we may transfer to a liquidating trust any assets not sold or distributed, subject to outstanding liabilities (as previously disclosed). If a liquidating trust were established, we would distribute to the then holders of our common shares interests in the liquidating trust in proportion to the number of common shares owned by such stockholders. The distribution would be a taxable event to stockholders who are subject to U.S. income tax, and there is not likely to be an accompanying distribution of cash or other assets with which to satisfy the resulting tax liability. A gain would be recognized to the extent the value of such liquidating distribution (based on the Company's net assets at such time) is greater than such stockholder's basis in their common shares. In addition, such stockholders would be treated as the owners of a pro rata portion of each asset received by and held by the liquidating trust and would be required to take into account in computing taxable income a pro rata share of each item of income, gain and loss of the liquidating trust. Such stockholders would also recognize taxable gain or loss when all or part of their pro rata portion of an asset is disposed of for an amount greater or less than their pro rata portion of the tax basis of such asset at the time of its disposition. Historically, extraordinary corporate actions, such as the Plan, often lead to securities class action lawsuits being filed against a company. At March 13, 2006, we were not aware of any pending securities class action lawsuits relating to the Plan. However, in the event such litigation should occur, it is likely to be expensive and, even if we ultimately prevail, the process will be time consuming and will divert management's attention from implementing the Plan and otherwise operating our business. If we do not prevail in any such lawsuit, we may be liable for damages, the validity of our stockholder's approval of the Plan may be challenged, or we may be unable to complete some transactions that we contemplate as part of the Plan. We cannot predict the outcome or the amount of expenses and damages but the amounts could have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders. Risks related to our properties and assets The value of our real estate assets are subject to certain risks applicable to our assets and inherent in the real estate industry which, if they materialize, could have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders and include:
o	downturns in the national, regional and local economies where our properties are located;
o	macroeconomic as well as specific regional and local market conditions;
o	competition from other for-sale housing developments;
o	local real estate market conditions, such as oversupply of, or reduction in demand for, residential homes and condominium units;
o	increased operating and construction costs, including insurance premiums, utilities, building materials, labor and real estate taxes;
o	increases in interest rates; and
o	cost of complying with environmental, zoning, and other laws.

15

We currently intend to continue to develop residential projects at Gold Peak, East Lyme and Claverack, through the subdivision, construction, and sale of condominium units or single family homes. Alternatively, or in combination, we may sell the East Lyme projects to another developer and sell our joint venture interest in Claverack to our partner in that venture, thus foregoing potential development profits associated with these properties. Our development and construction activities give rise to additional risks, which, if they materialize, could have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders and include:
o	the possibility that we may abandon development opportunities after expending significant resources to determine feasibility;
o	the possibility that we may not obtain construction financing on reasonable terms and conditions or an increased number of building lots for the Claverack project, which would affect the number of single family homes we can build and sell;
o	the possibility that development, construction, and the sale of our projects, may not be completed on schedule resulting in increased debt service expense, construction costs and general and administrative expenses;
o	the inability to obtain, or costly delays in obtaining, zoning, land-use, building, occupancy and other required governmental permits and authorizations, which could delay or prevent commencement of development activities or delay completion of such activities;
o	the fact that properties under development or acquired for development usually generate little or no cash flow until completion of development and sale of a significant number of homes or condominium units and may experience operating deficits after the date of completion and until such homes or condominium units are sold;
o	increases in the cost of construction materials; and
o	the inability to obtain proceeds from borrowings on terms financially advantageous to us or raise alternate equity capital.

Risks associated with the sale of properties which, if they materialize, could have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders and include:

o	lack of demand by prospective buyers;
o	inability to find qualified buyers;
o	inability of buyers to obtain satisfactory financing;
o	lower than anticipated sale prices; and
o	the inability to close on sales of properties under contract.
Furthermore, our estimate of the total liquidation value of the Company assumes a sale of Reis. As of March 13, 2006, Reis is currently considering offers from potential purchasers ranging between $90,000,000 and $100,000,000 to acquire 100% of its stock. Based on these offers, in estimating the net realizable value for its investment in Reis, the Company utilized $90,000,000 of net proceeds in valuing Reis. If Reis is sold at that amount, the Company will receive approximately $20,000,000 of proceeds, subject to escrow holdbacks. While these potential sale proceeds are now reflected in the Company's net realizable value presentation, there is no assurance that this transaction will be consummated. There is no assurance that if this current transaction is not consummated that Reis will sell the company to another party at the same price or at all. Separately, we only own a minority interest in Reis and therefore, we have no control over whether or when a sale would take place or at what price. It is likely that if we sold our interest in Reis outside of the context of the sale of Reis as an entity to a third party, we would receive a substantially discounted purchase price to reflect the fact that our interest represents a minority interest and is relatively illiquid. Any attempt to sell our interest independently of concurrent sales by other Reis stockholders may be restricted or impeded as a result of agreements made among Reis's stockholders or with Reis. These provisions may also decrease the value of the interest being sold. Furthermore, a portion of our ownership interest in Reis is through an entity in which we have two partners, all of whom must consent to any disposition of assets owned by that entity.

16

We have current and future obligations to creditors. Claims, liabilities and expenses from operations (such as operating costs, salaries, bonus and retention payments, directors' and officers' insurance, payroll and local taxes, legal, accounting and consulting fees and miscellaneous office expenses) will continue to be incurred through the liquidation process. As part of this process, we will attempt to satisfy any obligations with creditors remaining after the sale of our assets. These expenses will reduce the amount of assets available for ultimate distribution to our stockholders. To the extent our liabilities exceed the estimates that we have made, the amount of liquidating distributions to our stockholders will be reduced.

Some of our development projects have incurred, and may incur, debt, in which case a third party lender would be entitled to cash flow generated by such investments until such debt is repaid. As a result of such borrowings, we would be subject to certain risks normally associated with debt financing which, if they materialize, could have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders, including the risk that cash flow from sales of homes or condominium units will be insufficient to meet required payments of principal and interest, the risk that existing debt will not be able to be refinanced, the risk that the terms of such refinancings will not be as favorable to us and the risk that we will not be able to obtain modifications to increase borrowing capacity on existing construction loans. Such borrowings will increase the risk of loss on an investment which utilizes borrowings. If we default on secured indebtedness, the lender may foreclose and we could lose our entire investment in the security for such loan.

We currently have, and may incur additional indebtedness that bears interest at variable rates. Accordingly, if interest rates increase, so will our interest costs, which may have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders. The Company has limited its exposure to existing variable rate debt by purchasing interest rate caps. The expiration dates of these interest rate caps occur before the estimated completion dates of the construction.

Our debt obligations may require us to comply with a number of financial and other covenants on an ongoing basis. Some of those obligations may restrict our ability to make liquidating distributions to our stockholders, incur additional debt and engage in certain transactions and make certain types of investments and take other actions. In other cases, failure to comply with covenants may limit our ability to borrow funds or cause a default under one or more of our then existing loans, possibly causing acceleration of the unpaid principal balance.

Neither our organizational documents nor those of entities in which we invest contain any limitation on the amount of debt incurred. Accordingly, we and such entities could incur significant amounts of debt, resulting in increases in debt service payments which could increase the risk of default on indebtedness.

We have co-invested with third parties through partnerships, joint ventures or other entities including ventures where decisions require shared approval with third parties. Investments in partnerships, joint ventures, or other entities may, under certain circumstances, involve risks that would not be present were a third party not involved, including: the possibility that our partners or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions; that such partners or co-venturers might at any time have economic or other business interests or goals which are inconsistent with our business interests or goals; that such partners or co-venturers may be in a position to take action contrary to our instructions, requests, policies or objectives; we cannot agree with our partners on the sale of properties; and we will not be able to exercise sole decision-making authority. In addition, we may in certain circumstances be liable for the actions of third- party partners or co-venturers.

Uninsured and underinsured losses may affect the value of our properties or assets. There are certain types of losses, such as losses resulting from wars, terrorism, earthquakes, floods, hurricanes or other acts of God that may be uninsurable or not economically insurable. Should an uninsured loss or a loss in excess of insured limits occur, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to that property or asset.

17

Properties with environmental problems may create liabilities for us. Under Federal, state and local environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous or toxic substances at our properties, regardless of our knowledge or responsibility, simply because of current or past ownership or operation of the real estate by us or by a joint venture in which we have an interest. If certain environmental problems arise, we may have to make substantial payments which could have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders. Costs associated with the foregoing could be substantial and in extreme cases could exceed the value of the contaminated property. The presence of hazardous or toxic substances or the failure to properly remediate contamination could have a material adverse effect on our ability to borrow against or sell an affected property. In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination. The one environmental problem of which we are aware relates to the East Lyme Land which was recently acquired. The land requires remediation of pesticides used on the property when it was an apple orchard, the cost of which has been considered in evaluating the carrying amount of the property at December 31, 2005.

Our properties are subject to various Federal, state and local regulatory requirements, such as state and local fire and life safety requirements and the Americans with Disabilities Act. If we fail to comply with these requirements, we could incur fines or be subject to private damage awards. Compliance with requirements may require significant unanticipated expenditures by us. Such expenditures could have a material adverse effect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders.

Risks related to our organization and structure

We are dependent on key personnel. Jeffrey H. Lynford has been Chairman of the Board since our formation in 1997. He has also been our President and Chief Executive Officer since April 1, 2002. Mr. Lynford's employment agreement with us expires December 31, 2007. We also depend on the services of David M. Strong, our Senior Vice President for Development, specifically with respect to the Gold Peak project. Mr. Strong's employment agreement with us expires on December 31, 2007. The loss of the services of either Mr. Lynford or Mr. Strong could have a material adverse effect on our business, including the terms and conditions under which we dispose of our assets and continued availability of bank loans, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders. Furthermore, Mr. Lynford's contract provides that since the Company has disposed of all or substantially all of two of its business units, he is no longer required to devote substantially all of his time, attention and energies during business hours to the Company's activities. He may now perform services for and engage in business activities with other persons so long as such services and activities do not prevent him from fulfilling his fiduciary responsibilities to the Company. As previously described herein, on January 27, 2006, a company which is owned by Mr. Lynford and others acquired the Beekman project from the Company. Our business operations and ability to complete the Plan in a timely manner and sell our assets for the estimated proceeds could be negatively impacted if we are unable to retain the services of Messrs. Lynford and Strong, as well as other key personnel, or hire suitable replacements.

Mr. Lynford and Mr. Lowenthal, one of our directors, may have conflicts of interest. Mr. Lynford is the brother of Lloyd Lynford, a stockholder, director and the President of Reis. Mr. Lowenthal has served on the board of directors of Reis since the third quarter of 2000.

Our Board is divided into three classes, each consisting of one to three directors. The directors in each class serve for a three-year term with staggering expirations. This staggering may discourage offers for us or make an acquisition of us more difficult, even when an acquisition is in the best interest of our stockholders.

Our charter authorizes the Board to establish one or more series of preferred shares and the preferences and other terms of such series. Although the Board has no intention to do so, it could issue a series of preferred

18

shares that could impede or prevent a merger, tender offer or other transaction that some, or a majority, of our stockholders might believe to be in their best interest.

Under Maryland law, certain "business combinations" (including certain issuances of equity securities) between a Maryland corporation and any person who beneficially owns ten percent or more of the voting power of the corporation's shares or an affiliate thereof are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Our Board has exempted from the Maryland statute any business combinations with Messrs. Lynford and Lowenthal or any of their affiliates or any other person acting in concert or as a group with any of such persons and, consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between such persons and us.

Currently, we believe that either we are not within the definition of "investment company" as that term is defined under the Investment Company Act of 1940 (the "1940 Act") or, alternatively, may rely on one or more of the 1940 Act's exemptions. We intend to continue to conduct our operations in a manner that will exempt us from the registration requirements of the 1940 Act. If we were deemed to be an investment company because of our investment securities holdings, we must register as an investment company under the 1940 Act. The 1940 Act places significant restrictions on the capital structure and corporate governance of a registered investment company, and materially restricts its ability to conduct transactions with affiliates. Compliance with the 1940 Act could also increase our operating costs. Such changes could have a material adverse affect on our business, results of operations and financial condition and the timing and amount of liquidating distributions to our stockholders.

The Company has net operating loss ("NOL") carryforwards, for Federal income tax purposes, aggregating approximately $61,100,000 at December 31, 2005, which expire in the years 2007 through 2024 and are subject to an annual and aggregate limit on utilization of NOLs after an ownership change, pursuant to Section 382 of the Internal Revenue Code ("Section 382"). Ownership changes as set forth in Section 382 may have occurred during 2005. Any limitation on the utilization of NOLs may be mitigated as a result of recognizing any net unrealized built-in gains that existed at ownership change dates. If the Company determines that such a change in ownership did occur during 2005, there would not be a material impact to the accompanying consolidated financial statements.

Item 1B.	Unresolved Staff Comments.
None.

Item 2. Properties.

The following property information is presented by SBU.

Debt and Equity Activities

Clairborne Fordham

On September 15, 2004, Clairborne Fordham obtained title to the remaining unsold components of Fordham Tower and at December 31, 2004, these components consisted of 15 residential units and the 188 space parking garage. Only two residential units remain unsold at December 31, 2005. Clairborne Fordham intends to continue the orderly sale of the remaining two residential units in 2006.

19

Wellsford Mantua

The Company, through its investment in Wellsford Mantua, has an investment in the form of a loan secured by a lien on a leasehold interest in a 154 acre parcel in West Deptford, New Jersey which includes at least 64.5 acres of wetlands and a maximum of 71 acres of developable land.

Residential Activities

The Company owns or has ownership interests in the following residential development projects at December 31, 2005:

Property/Location	Year Acquired	Units Currently Zoned For	Expected Initial Delivery of Completed Units	Type	Encumbrance
Gold Peak/Denver, CO (A)	1999	259	2006	Condominiums	$	11,575,000
The Orchards/East Lyme, CT	2004	101	2006	Single	$	7,226,000
				family home
East Lyme Land/East Lyme, CT	2005	60 (B)	--	Single family		N/A
				home lots
The Stewardship/Claverack, NY	2004	6 (C)	2008	Single		N/A
				family home
Custom design homes/Claverack, NY	2004	7 (C)	2007	Single	$	449,000
				family home
Poughquag Condominiums/ Beekman, NY	2005	(D)	(D)	Condominium		N/A

(A)	At December 31, 2005, there were 84 units under contract with nominal down payments. Initial unit deliveries commenced in January 2006.
(B)	The East Lyme Land is contiguous to the previously purchased East Lyme property.
(C)	The Claverack project is two land parcels aggregating 300 acres. One land parcel is subdivided into seven single family home lots on approximately 65 acres upon which Claverack intends to build and sell custom designed homes. The remaining 235 acres, known as The Stewardship, are currently subdivided into six single family home lots with the intent to obtain an increase in the number of developable residential lots to 49 lots, improve the land, obtain construction financing and construct and sell single family homes.
(D)	As a result of various uncertainties including that the governmental approval and development processes may take an indeterminate period and extend beyond December 31, 2008, the Beekman interests were sold in January 2006.

Item 3.	Legal Proceedings.
The Company is not presently a party in any material litigation.
Item 4.	Submission of Matters to a Vote of Security Holders.

On November 17, 2005, the Company held its annual meeting of stockholders. A total of 6,408,951 common shares, representing approximately 99% of the 6,467,639 common shares outstanding and entitled to vote (including 169,903 class A-1 common shares), as of the record date (October 11, 2005) were represented in person or by proxy vote and constituted a quorum. The Company's common shares and class A-1 common shares are herein referred to as the "common shares" or "common stock."

At the meeting, the stockholders approved the Plan, by the affirmative vote of 5,003,794 common shares, thereby authorizing the Board to liquidate all of the Company's assets and, after making the necessary and appropriate reserves against liabilities, make distributions of the proceeds of the liquidation to the Company's stockholders and dissolve the Company. Votes cast against the proposal were 2,329 common shares and 2,093 common shares abstained from voting.

At the meeting, Douglas Crocker II, Mark S. Germain and Jeffrey H. Lynford were elected as directors to serve terms of three years expiring at the 2008 annual meeting of stockholders or, until their respective successors are duly elected and qualify. These elected directors join the following existing directors until their terms expire: Bonnie R. Cohen and Meyer "Sandy" Frucher, whose terms expire in 2006 and Edward Lowenthal whose term

20

expires in 2007. The following table details the voting results for each director at the November 17, 2005 annual meeting.

	Affirmative Votes	Votes Withheld
Douglas Crocker II	6,260,969	147,982
Mark S. Germain	6,281,288	127,663
Jeffrey H. Lynford	6,260,931	148,020

The stockholders also ratified the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2005 by the affirmative vote of 6,406,823 common shares. Votes cast against the proposal were 278 common shares and 1,850 common shares abstained from voting.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

The Company's common shares are traded on the AMEX under the symbol "WRP". The approximate number of holders of record of the common shares and class A-1 common shares were approximately 400 and 1, respectively, as of December 31, 2005. On January 25, 2006, EQR, the sole holder of the outstanding class A-1 common shares, converted its 169,903 class A-1 shares to common shares. The high and low closing sales prices for the common shares on the AMEX and the dividends declared for the years ended December 31, 2005 and 2004 are as follows:

	2005			2004
Quarter	High	Low	Dividends	High	Low	Dividends
First	$15.00	$13.85	None	$19.50	$16.51	None
Second	$17.83	$13.91	None	$18.50	$15.25	None
Third	$19.23	$17.70	None	$15.90	$14.63	None
Fourth	(A)	(A)	See below	$16.00	$14.42	None

(A) On December 15, 2005, the Company's stock began trading ex-dividend after a $14.00 per share initial liquidating distribution. The high and low closing prices of the common shares from October 1, 2005 to December 14, 2005 were $19.85 and $18.81, respectively, and from December 15, 2005 to December 31, 2005 were $6.00 and $5.70, respectively.

Dividends

The Company made its initial liquidating distribution of $14.00 per share on December 14, 2005. The Company did not declare or distribute any other dividends during 2005 or 2004.

21

Securities Authorized for Issuance Under Equity Compensation Plans

The following table details information for each of the Company's compensation plans at December 31, 2005:

	Number of Securities to be Issued upon Exercise of Options		Weighted Average Exercise Price of Outstanding Options		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
	(a)		(b)		(c)
Equity compensation plans approved by stockholders:
Rollover Stock Option Plan		245,103	$	20.60		170,845
1997 Management Incentive Plan		151,437	$	21.44		240,464
1998 Management Incentive Plan		124,125	$	17.13		353,574
		520,665	$	20.02		764,883
Equity compensation plans not approved by stockholders		--	$	--		--
Total		520,665	$	20.02		764,883

For additional information regarding the Company's stock option plans, including an increase in the number of options and a decline in their exercise prices as a result of the initial liquidating distribution, and other adjustments, see Footnote 9 to the Company's consolidated financial statements.

Issuer Purchases of Equity Securities

Pursuant to the Plan, the Company may repurchase common shares.

22

Item 6.

Selected Financial Data.

The following tables set forth selected consolidated financial data for the Company and should be read in conjunction with the consolidated financial statements included as a separate section of this annual report on Form 10-K starting at page F-1. As further described in Notes 1 and 2 in the accompanying consolidated financial statements, the Company adopted the liquidation basis of accounting effective as of the close of business on November 17, 2005. Information prior to that date is presented on the going concern basis of accounting.

(amounts in thousands, except per share data)	Consolidated Statement of Changes in Net Assets (Liquidation Basis)			Summary Consolidated Statement of Operations Data (A) (Going Concern Basis)
	For the Period November 18 to			For the Period January 1 to			For the Years Ended December 31,
	December 31, 2005			November 17, 2005			2004			2003			2002			2001
Net assets in liquidation -
November 18, 2005	$	146,889
Distributions to stockholders (H)		(90,597	)
Exercise of stock options		56
Operating income		221
Changes in net assets in liquidation		(90,320	)
Net assets in liquidation -
December 31, 2005	$	56,569
Revenues				$	14,710		$	27,649		$	35,602		$	30,512		$	40,166
Costs and expenses (B) (C)					(23,623	)		(37,580	)		(37,903	)		(33,750	)		(45,559	)
Income (loss) from joint ventures(D)(E)    (F)					11,850			(23,715	)		(34,429	)		(209	)		4,564
Minority interest benefit (expense)					172			88			85			43			(283	)
Income (loss) before income taxes,
Convertible Trust Preferred
Securities and discontinued
operations					3,109			(33,558	)		(36,645	)		(3,404	)		(1,112	)
Income tax (expense) benefit (F)					(91	)		130			(7,135	)		1,322			(513	)
Convertible Trust Preferred
Securities distributions, net
of tax benefit of $720 in
2002 and 2001 (C)					--			--			(2,099	)		(1,380	)		(1,380	)
Income (loss) from continuing
operations					3,018			(33,428	)		(45,879	)		(3,462	)		(3,005	)
Income from discontinued
operations, net of taxes(G)					--			725			20			90			280
Net income (loss)				$	3,018		$	(32,703	)	$	(45,859	)	$	(3,372	)	$	(2,725	)
Per share amounts, basic and diluted:
Income (loss) from continuing
operations				$	0.47		$	(5.17	)	$	(7.11	)	$	(0.53	)	$	(0.42	)
Income from discontinued
operations (G)					--			0.11			--			0.01			0.04
Net income (loss)				$	0.47		$	(5.06	)	$	(7.11	)	$	(0.52	)	$	(0.38	)
Cash dividends declared per common
share (H)	$	14.00		$	--		$	--		$	--		$	--		$	--
Weighted average number of common
shares outstanding:
Basic					6,468			6,460			6,454			6,437			7,213
Diluted					6,470			6,460			6,454			6,437			7,213

See footnotes to table on next page.

23

Selected Financial Data (continued)

	Consolidated Net Assets in Liquidation (Liquidation Basis)		Summary Consolidated Balance Sheet Data (Going Concern Basis)
	December 31,
	2005		2004			2003			2002			2001
Real estate assets, at cost	$	--	$	151,275		$	147,357		$	156,676		$	164,916
Accumulated depreciation		--		(21,031	)		(16,775	)		(12,834	)		(9,386	)
Real estate assets under development,
at estimated value		44,233		--			--			--			--
Notes receivable		158		1,190			3,096			28,612			34,785
Assets held for sale (G)		--		--			2,335			6,256			5,844
Investment in joint ventures		20,453		13,985			53,760			94,181			95,807
Cash and cash equivalents		41,027		65,864			55,378			38,582			36,092
Investments in U.S. Government
securities		--		27,551			27,516			--			--
Total assets, at cost		--		254,637			285,827			332,775			345,838
Total assets, at estimated value		126,670		--			--			--			--
Reserve for estimated costs during the     liquidation period		24,057		--			--			--			--
Mortgage notes payable		19,250		108,853			109,505			112,233			121,731
Debentures (C)		--		25,775			--			--			--
Convertible Trust Preferred
Securities (C)		--		--			25,000			25,000			25,000
Total shareholders' equity		--		98,783			131,274			176,567			178,079
Net assets in liquidation		56,569		--			--			--			--
Other balance sheet information:
Common shares outstanding		6,471		6,467			6,456			6,451			6,405
Equity per share			$	15.28		$	20.33		$	27.37		$	27.80
Net assets in liquidation per share	$	8.74

(A)	See Item 7. - Management's Discussion and Analysis of Financial Condition and Results of Operations for significant changes in revenues and expenses of the Company.
(B)	Includes a restructuring charge of $3,527 during the year ended December 31, 2001, with no similar charges in other periods presented.
(C)	During the first quarter of 2004, the Company de-consolidated the entity that issued the Convertible Trust Preferred Securities as required by the Financial Accounting Standards Board Interpretation No. 46R ("FIN46R"). Accordingly, the Company presents the $25,775 of Debentures instead of $25,000 of Convertible Trust Preferred Securities on its balance sheet at December 31, 2004. The expense for the Debentures of approximately $824 and $2,100 is included with interest expense as a component of costs and expenses for the period January 1, 2005 to November 17, 2005 and the year ended December 31, 2004, respectively, instead of as distributions, net of tax benefit as it had been presented for the years ended December 31, 2003, 2002 and 2001. In April 2005, the Company completed the redemption of the Debentures.
(D)	During 2005, the Company realized income of $11,148 from Wellsford/Whitehall including a $5,986 gain on redemption of its interest and approximately $6,000 from its share of net gains from property sales.
(E)	The loss in the 2004 period is primarily attributable to (i) a $9,000 impairment charge recorded by the Company at September 30, 2004 related to the sale of its interest in Second Holding, (ii) the Company's net $6,606 share of a write-down of one of Second Holding's investments during the first quarter of 2004 and (iii) the Company's share of losses aggregating $10,437 from Wellsford/Whitehall.
(F)	During the fourth quarter of 2003, Wellsford/Whitehall recorded an impairment charge of approximately $114,700 related to 12 assets in the portfolio. The Company's share of this impairment charge was approximately $37,377 in 2003 and as a result, the Company wrote-off related unamortized warrant costs on the Company's books of approximately $2,644 related to Wellsford/Whitehall and determined at that time that it was not appropriate to carry the balance of the net deferred tax asset attributable to NOL carryforwards and recorded a valuation allowance of $6,680 in the fourth quarter of 2003.
(G)	Relates to the classification of two properties in the Debt and Equity Activities SBU as a discontinued operation effective as of June 30, 2003.
(H)	Initial liquidating distribution.

24

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The following discussion should be read in conjunction with the "Selected Consolidated Financial Data" and the Company's Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.

Plan of Liquidation

On May 19, 2005, the Company's Board approved the Plan and on November 17, 2005, the Company's stockholders adopted the Plan. The Plan contemplates the orderly sale of each of the Company's remaining assets, which are either owned directly or through the Company's joint ventures, the collection of all outstanding loans from third parties, the orderly disposition or completion of construction of development properties, the discharge of all outstanding liabilities to third parties and, after the establishment of appropriate reserves, the distribution of all remaining cash to stockholders.

The Company currently contemplates that approximately 36 months after the approval of the Plan any remaining assets and liabilities would be transferred into a liquidating trust. The liquidating trust would continue in existence until all liabilities have been settled, all remaining assets have been sold and proceeds distributed and the appropriate statutory periods have lapsed.

After the approval of the Plan by the stockholders, the Company completed the sale of its largest asset, the three residential rental phases of its Palomino Park project for $176,000,000. On December 14, 2005, the Company made the initial liquidating distribution of $14.00 per share, aggregating approximately $90,597,000, to its stockholders.

For all periods preceding stockholder approval of the Plan on November 17, 2005, the Company's financial statements are presented on the going concern basis of accounting. As required by generally accepted accounting principles, the Company adopted the liquidation basis of accounting as of the close of business on November 17, 2005. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted as appropriate.

The following paragraphs summarize certain of the material actions and events which have occurred regarding the Plan and certain decisions of the Board.

In March 2004, the Company reported that the Board authorized and retained the financial advisory firm, Lazard Ltd, to advise the Company on various strategic financial and business alternatives available to it to maximize stockholder value. Such alternatives included a recapitalization, acquisitions, disposition of assets, liquidation, the sale or merger of the Company and other alternatives that would keep the Company independent. On May 19, 2005, after consideration of the alternatives available, the Company announced that its Board approved the Plan.

In March 2005, the Board authorized the marketing of the three residential rental phases of Palomino Park. In the second quarter of 2005, the Company engaged a broker to market these phases. In August 2005, the Company entered into an agreement to sell these phases for $176,000,000, subject to, among other things, stockholder approval of the Plan. The sale closed on November 22, 2005.

The following transactions, which are consistent with the intent of the Plan, occurred prior to the November 17, 2005 adoption of the Plan by the stockholders: (i) in September 2005, the Company's interest in its Wellsford/Whitehall joint venture was redeemed for approximately $8,300,000, (ii) by May 2005, the Company retired $12,680,000 of tax exempt bond financing, (iii) in April 2005, the Company redeemed its outstanding $25,775,000 of Debentures and (iv) in November 2004, the Company received $15,000,000 for its interest in Second Holding.

25

On October 3, 2005, the Board met to review with management the cash distributions which the Company expected stockholders to receive in connection with the Plan in view of the recent redemption of the Company's interest in Wellsford/Whitehall, the impending sale of the three residential rental phases of Palomino Park and the recent decision for the Company to continue to incur the costs of operating as a public company through the liquidation period. As a result of the foregoing factors, the Board determined to increase by $0.50 per share, the range for the aggregate cash distributions it expects stockholders will receive as a result of the Plan from the previously announced range of $18.00 to $20.50 per share to $18.50 and $21.00 per share. The Board also estimated that the initial liquidating distribution would be $14.00 per share, which was at the high end of the previously estimated range of $12.00 and $14.00 per share. The initial liquidating distribution of $14.00 per share was made on December 14, 2005 to stockholders of record on December 2, 2005.

At December 31, 2005, the Company reported in the accompanying financial statements that its net assets in liquidation aggregated $56,569,000, or $8.74 per share based upon 6,471,179 common shares outstanding at December 31, 2005. This amount presents development projects at estimated net realizable value after giving effect to the discounting of estimated net proceeds therefrom. All other assets are presented at estimated net realizable value on an undiscounted basis. The amount also includes a reserve for future estimated general and administrative expenses and other costs during the liquidation. Estimated net realizable value reflects economic changes and various other changed circumstances over recent months. There can be no assurance that these estimated values will be realized. Such amount should not be taken as an indication of the timing or amount of future distributions to be made by the Company (see the Liquidation Basis of Accounting disclosure below).

The timing and amount of interim liquidating distributions (if any) and final liquidating distributions will depend on the timing and amount of proceeds the Company will receive upon the sale of the remaining assets and the extent to which reserves for current or future liabilities are required. Accordingly, there can be no assurance that there will be any liquidating distributions prior to a final liquidating distribution.

Selected Significant Accounting Policies

Management has selected the following accounting policies which it believes are significant in understanding the Company's activities, financial position and operating results.

Basis of Presentation

Liquidation Basis of Accounting

With the approval of the Plan by the stockholders, the Company adopted the liquidation basis of accounting effective as of the close of business on November 17, 2005. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted as appropriate. A Statement of Net Assets in Liquidation and a Statement of Changes in Net Assets in Liquidation are the principal financial statements presented under the liquidation basis of accounting. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amounts represent estimates, based on present facts and circumstances, of the net realizable values of assets and the costs associated with carrying out the Plan and dissolution based on the assumptions set forth below. The actual values and costs associated with carrying out the Plan are expected to differ from the amounts shown herein because of the inherent uncertainty and will be greater than or less than the amounts recorded. Such differences may be material. In particular, the estimates of the Company's costs will vary with the length of time it operates. In addition, the estimate of net assets in liquidation in the accompanying Statement of Net Assets in Liquidation, which except for projects under development, does not incorporate a present value discount. Accordingly, it is not possible to predict the aggregate amount or timing of future distributions to stockholders and no assurance can be given that the amount of liquidating distributions to be received will equal or exceed the estimate of net assets in liquidation presented in the accompanying Statement of Net Assets in Liquidation or the price or prices at which the Company's common stock has traded or is expected to trade in the future.

26

Valuation Assumptions

Under the liquidation basis of accounting, the carrying amounts of assets as of the date of the adoption of the Plan (November 17, 2005) were adjusted to their estimated net realizable values and liabilities including the estimated costs associated with implementing the Plan were adjusted to estimated settlement amounts. The following are the significant assumptions utilized by management in assessing the value of assets and the expected settlement values of liabilities included in the Statement of Net Assets in Liquidation at November 18, 2005 and December 31, 2005.

Net Assets in Liquidation

Real estate assets under development are primarily reflected at net realizable value which is based upon the Company's budgets for constructing and selling out the respective project in the orderly course of business. Sales prices are based upon contracts signed to date and budgeted sales prices for the unsold units or homes. Sales prices have been determined in consultation with the respective third party company who is the sales agent for the project, where applicable. Costs and expenses are based upon the Company's budgets which have been reviewed with the third party construction company or joint venture partner. In certain cases, construction costs are subject to binding contracts. The Company has assumed that existing construction financing will remain in place during the respective projects' planned construction and sell out. Anticipated future cost increases for construction are assumed to be funded by the existing construction lenders and the Company at the present structured debt to equity capitalization ratios in which event the Company will make additional equity contributions. For one project, the Company has assumed that a construction loan will be obtained at currently existing LIBOR spreads and customary industry debt to equity capitalization levels. The expected net sales proceeds have been discounted on a quarterly basis at 17.5% to 26% annual rates to determine the estimated net realizable value of the Company's equity investment.

The East Lyme Land parcel acquired in November 2005 is stated at cost which is the current estimated net realizable value.

The Reis valuation amount is based upon offers Reis is currently considering from potential purchasers as of March 13, 2006. See Forward Looking Statements and Risk Factors for additional disclosure regarding the risks and uncertainties regarding Reis and the possible sale of that company.

Assets of the deferred compensation plan are included in restricted cash and investments and primarily stated at their respective market values and are equal to the related deferred compensation liability.

The Beekman assets are presented at the Company's aggregate cost which equals its net realizable value. On January 27, 2006, a company which is owned by Messrs. Lynford and Lowenthal, the principal of the Company's joint venture partner in the East Lyme project and others acquired the Beekman project for an amount equal to costs and expenses incurred by the Company.

Cash, deposits and escrow accounts are presented at face value. The Company's remaining assets, that the Company has determined to have a cash value, are stated at estimated net realizable value which is the expected selling price or contractual payment to be received, less applicable direct costs or expenses, if any. The assets that have been valued on this basis include receivables, joint venture investments and other investments. All assets, other than as described above, were assigned no value at November 18, 2005 and December 31, 2005.

Mortgage notes and construction loans payable, construction payables and accrued expenses and other liabilities are stated at settlement amounts.

Reserve for Estimated Costs During the Liquidation Period

Under the liquidation basis of accounting, the Company is required to estimate and accrue the costs associated with implementing and completing the Plan. These amounts can vary significantly due to, among other things,

27

the timing and realized proceeds from sales of the projects under development and the sale of Reis to a third party, the costs of retaining personnel and others to oversee the liquidation, including the cost of insurance, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with cessation of the Company's operations including an estimate of costs subsequent to that date (which would include reserve contingencies for the appropriate statutory periods). As a result, the Company has accrued the projected costs, including corporate overhead and specific liquidation costs of severance and retention bonuses, professional fees, and other miscellaneous wind-down costs, expected to be incurred during the projected period required to complete the liquidation of the Company's remaining assets. Also, the Company has not recorded any liability for any cash operating shortfall that may result at the projects under construction during the anticipated holding period because management currently expects that projected operating shortfalls could be funded from the operating profits overall from the sale of homes and condominium units and interest earned on invested cash. These projections could change materially based on the timing of any such anticipated sales, the performance of the underlying assets and changes in the underlying assumptions of the cash flow amounts projected. These accruals will be adjusted from time to time as projections and assumptions change.

The following is a summary of the changes in the Reserve for Estimated Costs During the Liquidation Period:

	November 18, 2005		Transfers and Payments		December 31, 2005
Payroll, benefits, severance and
retention costs	$	12,368,000	$	405,000	$	11,963,000
Professional fees		4,837,000		122,000		4,715,000
Other general and administrative costs		7,562,000		183,000		7,379,000
Total	$	24,767,000	$	710,000	$	24,057,000

Going Concern Basis of Accounting

For all periods preceding the approval of the Plan on November 17, 2005, the Company's financial statements are presented on the going concern basis of accounting. Such financial statements reflect the historical basis of the assets and liabilities as of December 31, 2004 and the historical results of operations related to the Company's assets and liabilities for the period from January 1, 2005 to November 17, 2005 and the years ended December 31, 2004 and 2003, as well as all preceding years.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries and include the assets and liabilities contributed to and assumed by the Company from the Trust, from the time such assets and liabilities were acquired or incurred, respectively, by the Trust. Investments in entities where the Company does not have a controlling interest were accounted for under the equity method of accounting. These investments were initially recorded at cost and are subsequently adjusted for the Company's proportionate share of the investment's income (loss) and additional contributions or distributions through the adoption of the liquidation basis of accounting. Investments in entities where the Company does not have the ability to exercise significant influence are accounted for under the cost method. All significant inter-company accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.

Variable Interests

During 2003, the Financial Accounting Standards Board issued Interpretation No. 46R "Consolidation of Variable Interest Entities." The Company evaluates its investments and subsidiaries to determine if an entity is a voting interest entity or a variable interest entity ("VIE") under the provisions of FIN46R. An entity is a VIE when (i) the equity investment at risk is not sufficient to permit the entity from financing its activities without additional subordinated financial support from other parties or (ii) equity holders either (a) lack direct or indirect ability to make decisions about the entity, (b) are not obligated to absorb expected losses of the entity or (c) do

28

not have the right to receive expected residual returns of the entity if they occur. If an entity or investment is deemed to be a VIE, an enterprise that absorbs a majority of the expected losses of the VIE or receives a majority of the residual returns is considered the primary beneficiary and must consolidate the VIE. The following table and footnotes identify the Company's VIEs:

	VIE at December 31,		Requires
Entity (a)	2005	2004	Consolidation
WRP Convertible Trust I	N/A	Yes	No (b)
Non-qualified deferred compensation trust	Yes	Yes	Yes (c)
Reis	Yes	Yes	No (d)
Second Holding	N/A	(e)	No (f)
Wellsford Mantua	Yes	Yes	Yes (g)
Claverack	Yes	Yes	Yes (h)
Beekman	Yes	Yes	No (i)

(a) For additional information regarding these entities, see Footnotes 2 and 11 to the Company's consolidated financial statements.

(b)	The entity that issued the Convertible Trust Preferred Securities is a VIE, however, it is not appropriate to consolidate this entity under the provisions of FIN46R as equity interests are variable interests only to the extent that the investment is considered to be at risk. Since the Company's investment was funded by WRP Convertible Trust I, it is not considered to be at risk. Accordingly, the Company de-consolidated the entity during the first quarter of 2004. The entity ceased operations when the Convertible Trust Preferred Securities were redeemed in April 2005.
(c)	The non-qualified deferred compensation trust ("Rabbi Trust" or "Deferred Compensation Plan") is a VIE as it does not have its own equity. The Company is the primary beneficiary of the Rabbi Trust as the assets would be subject to attachment in a bankruptcy. The Company consolidated the assets and liabilities of the Rabbi Trust at December 31, 2005 and 2004, as well as for periods prior to the issuance of FIN46R as appropriate under other existing accounting literature.
(d)	Reis is a VIE because as of the last capital event for that entity in 2002 (the triggering event for VIE evaluation purposes), it was determined that Reis did not have sufficient capital to support its business activities at that time. Consolidation of Reis is not required by the Company as it would not be the primary beneficiary.
(e)	The Company sold its investment in Second Holding in November 2004.
(f)	Second Holding was a VIE at December 31, 2003, however, the Company was not the primary beneficiary because it would not expect that it would absorb a majority of Second Holding's probability-weighted expected losses, nor would it ever receive a majority of the residual returns. Therefore, consolidation was not required under FIN46R nor was consolidation appropriate under then existing accounting literature. The Company used the equity method of accounting to account for this investment.
(g)	Wellsford Mantua is a VIE as the venture does not have sufficient equity to support its operations as the Company provides 100% of the financing to this entity and the owners have deminimus equity in the entity. The Company is the primary beneficiary and consolidates this entity.
(h)	Claverack, an entity in which the Company owns a 75% interest in equity and profits (except if returns exceed 35% per annum as defined) is considered a VIE, since the original capital is insufficient to support its contemplated activities. Claverack is consolidated, even though the two members share business decisions equally, since the Company would be the primary beneficiary of profits or absorber of losses. At December 31, 2005, Claverack had $62,000 of restricted cash and was subject to $449,000 of construction debt which was jointly guaranteed by the Company and the principal of its joint venture partner.
(i)	Beekman is a VIE, however, since the Company's investment was a mortgage interest, the Company has no GAAP equity in the entity and would not be the primary bearer of losses, consolidation is not appropriate.

Real Estate, Other Investments, Depreciation, Amortization and Impairment

Costs directly related to the acquisition, development and improvement of real estate are capitalized, including interest and other costs incurred during the construction period. Costs incurred for significant repairs and maintenance that extend the usable life of the asset or have a determinable useful life are capitalized. Ordinary repairs and maintenance are expensed as incurred. The Company expensed all lease turnover costs for its residential units such as painting, cleaning, carpet replacement and other turnover costs as such costs were incurred.

29

Depreciation was computed over the expected useful lives of depreciable property on a straight-line basis, principally 27.5 years for residential buildings and improvements and two to twelve years for furnishings and equipment.

The Company has historically reviewed its real estate assets, investments in joint ventures and other investments for impairment (i) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable for assets held for use and (ii) when a determination is made to sell an asset or investment. Under the liquidation basis of accounting, the Company will evaluate the fair value of real estate assets owned and under construction and make adjustments to the carrying amounts when appropriate.

Revenue Recognition

Commercial properties were leased under operating leases. Rental revenue from office properties was recognized on a straight-line basis over the terms of the respective leases. Residential units were leased under operating leases with typical terms of six to fourteen months and such rental revenue was recognized monthly as tenants were billed. Interest revenue is recorded on an accrual basis. Fee revenues were recorded in the period earned, based upon formulas as defined by agreement for management services or upon asset sales and purchases by certain joint venture investments. Sales of real estate assets, including condominium units and single family homes, and investments are recognized at closing subject to receipt of down payments and other requirements in accordance with applicable accounting guidelines.

Income Taxes

The Company accounts for income taxes under SFAS No. 109 "Accounting for Income Taxes." Deferred income tax assets and liabilities are determined based upon differences between financial reporting, including the liquidation basis of accounting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are estimated to be in effect when the differences are expected to reverse. Valuation allowances with respect to deferred income tax assets are recorded when deemed appropriate and adjusted based upon periodic evaluations.

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Changes in Net Assets and Results of Operations

Changes in net assets in liquidation from November 18, 2005 to December 31, 2005

During the period from November 18, 2005 through December 31, 2005, the Company realized operating income of $221,000 which primarily represents interest income earned from cash and cash equivalents offset in part by operating costs of properties under development.

On November 22, 2005, the Company completed the sale of its major asset, the three residential rental phases of the Palomino Park development for $176,000,000, before closing and other costs. At this time, the Company retired debt of approximately $94,035,000 and paid interest and debt prepayment costs of approximately $5,012,000.

On December 14, 2005, the Company made the initial liquidating distribution of $14.00 per common share, aggregating approximately $90,597,000, to its stockholders.

30

Comparison of January 1, 2005 through November 17, 2005 to the year ended December 31, 2004

The Company had net income of $3,018,000, or $0.47 per share for the period January 1, 2005 to November 17, 2005, whereas the Company had a net (loss) of $(32,703,000) or $(5.06) per share for the year ended December 31, 2004. The results for the 2005 period were positively impacted by the Company's share of income from the sale of properties by Wellsford/Whitehall during the second quarter of 2005 and the gain of approximately $5,986,000 from the redemption of the Company's interest in Wellsford/Whitehall. The loss in the 2004 period is primarily attributable to (i) a $9,000,000 impairment charge recorded by the Company at September 30, 2004 related to the sale of its interest in Second Holding, (ii) the Company's net $6,606,000 share of a write-down of one of Second Holding's investments during the first quarter of 2004 and (iii) the Company's share of losses aggregating $10,437,000 from Wellsford/Whitehall, including impairment provisions recorded at December 31, 2004 related primarily to classifying assets as held for sale and writing down the assets to expected selling prices, less closing costs ($7,419,000) and losses from operations ($3,307,000) net of net gains from 2004 asset disposition transactions ($289,000).

As described above, the Company sold its largest asset on November 22, 2005 and thereby ceased all rental operations, eliminating all rental income and property operating expenses, management, real estate taxes, depreciation and certain other costs for these assets. In addition, as described above, the liquidation basis of accounting requires the Company to establish a liability for all costs expected to be incurred in executing the Plan. Accordingly, effective November 18, 2005, all subsequent general and administrative costs incurred are charged against this liability.

Other than as described below, the Palomino Park sale and the adoption of the liquidation basis of accounting accounts for the differences between the 2005 period and the 2004 period.

The final two Silver Mesa condominium units were sold during the 2005 period. Revenue from these sales and the associated cost of sales were $488,000 and $386,000, respectively, during the 2005 period. During the 2004 period revenues from sales of residential units and the associated cost of sales from such units were $12,288,000 and $10,131,000, respectively, from 53 Silver Mesa unit sales. Closing of sales of individual homes and condominium units at the Company's East Lyme and Gold Peak development projects are expected to commence in 2006.

Interest revenue increased $354,000. Although the 2005 period reflects earnings through November 17, 2005, interest revenue was greater in 2005 primarily due to higher interest rates during that period.

Fee revenue decreased $279,000. The decrease is primarily attributable to fees earned from Second Holding in 2004 of $751,000, with no 2005 equivalent as this investment was sold in November 2004. This decrease was partially offset by an increase of $472,000 in asset disposition fees payable by Whitehall derived from Wellsford/Whitehall sales as such fees were $46,000 during 2004, as compared to fees of $518,000 earned in the 2005 period. As a result of the redemption of the Company's interest in Wellsford/Whitehall, fee revenue will no longer be earned by the Company.

Depreciation expense decreased $750,000. This decrease primarily relates to the impact of a full year's worth of depreciation expense on the Palomino Park assets in 2004 ($522,000) as well as the amortization related to the Clairborne Fordham venture recorded in the 2004 period ($170,000) and the write-off of unamortized Second Holding costs in November 2004 as a result of the sale of that investment, with no 2005 equivalent expense.

Interest expense for mortgages decreased $1,490,000. The decrease is primarily attributable to net capitalized interest of $974,000 in 2005 as compared to $489,000 in 2004 as the 2005 period includes interest capitalization on projects with construction financing and on the Company's invested capital as capitalization on these projects commenced in the later part of 2004. In addition, the outstanding principal balances with respect to the Palomino Park phases' amortizing loans were retired upon the sale of these assets in November 2005 ($653,000) as well as the $12,680,000 of Palomino Park Bonds during 2005 ($352,000).

31

Interest expense for Debentures decreased $1,276,000 as a result of the redemption in April 2005 ($1,512,000), offset in part by a write-off of the related balance of the unamortized deferred debt costs in excess of normal amortization ($236,000).

General and administrative expenses increased $614,000 based upon prorated 2004 expenses, primarily due to increases in salaries and incentive payments based upon contractual obligations, increases in accruals for legal and accounting based upon higher costs in these categories and transaction costs in excess of 2004 amounts to accomplish the Plan. Such increases were partially offset by reductions in certain other expense categories including the expensing of stock options for directors in the 2004 period with no such expense during the 2005 period.

The Company recognized income of $11,850,000 during the 2005 period from its joint venture investments as compared to a loss of $(23,715,000) in 2004. An analysis of the change follows:

	For the Period January 1 to November 17, 2005		For the Year Ended December 31, 2004			Increase
Wellsford/Whitehall (A) (B)	$	11,148,000	$	(10,437,000	)	$	21,585,000
Second Holding (C)		--		(13,790,000	)		13,790,000
Clairborne Fordham		702,000		512,000			190,000
Income (loss) from joint ventures	$	11,850,000	$	(23,715,000	)	$	35,565,000

(A)	The 2005 period reflects an aggregate gain of approximately $5,986,000 upon redemption of the Company's 35.21% equity interest during September 2005 (for approximately $8,300,000 of proceeds) and receipt of $141,000 of additional proceeds in December 2005. Fifteen properties were sold during the 2005 period for a net gain of which the Company's share was approximately $6,000,000. Operations during the 2005 period were impacted by these sales.
(B)	The 2004 period was primarily impacted by (i) impairment provisions recorded at December 31, 2004 related primarily to classifying assets as held for sale and writing down the assets to expected selling prices, less closing costs ($7,419,000) and (ii) losses from operations ($3,307,000) net of (iii) net gains from 2004 asset disposition transactions ($289,000).
(C)	The loss for 2004 is the result of (i) a $12,930,000 net impairment charge taken by Second Holding (of which the Company's share was $6,606,000) related to the write-down of one of its investments during the first quarter of 2004, offset by a partial recovery when the investment was sold in the second quarter of 2004 and (ii) a $9,000,000 impairment charge recorded by the Company at September 30, 2004 related to the ultimate sale of its interest in the venture in November 2004.

Income tax expense of $91,000 in the 2005 period is net of a net deferred tax credit of $109,000. The 2004 tax credit of $130,000 is after $300,000 of deferred tax credits. The current taxes relate to minimum state and local taxes based on capital.

Income from discontinued operations after taxes reflects the reclassification of the revenue and expenses from property in the Debt and Equity Activities SBU as a result of the change in classification to held for sale at June 30, 2003. The income from discontinued operations of $725,000 for the year ended December 31, 2004, is primarily attributable to the sale of the remaining property during April 2004, at which time the Company recognized a reversal of an impairment reserve upon the completion of that sale and recognized contingent proceeds from a 2003 property sale during the nine months ended September 30, 2004, the sum of which aggregated $809,000. This amount was partially offset by the effect of state income taxes.

Comparison of the year ended December 31, 2004 to year ended December 31, 2003

The change in net (loss) per share, basic and diluted from a (loss) in 2003 of $(7.11) per share to a (loss) in 2004 of $(5.06) per share, is attributable to a current period (loss) of $(32,703,000), whereas in the 2003 period, the (loss) was $(45,859,000).

The loss in the 2004 period is primarily attributable to (i) a $9,000,000 impairment charge recorded by the Company at September 30, 2004 related to the sale of its interest in Second Holding, (ii) the Company's net $6,606,000 share of a write-down of one of Second Holding's investments during the first quarter of 2004 and (iii) the Company's share of losses aggregating $10,437,000 from Wellsford/Whitehall, including impairment provisions recorded at December 31, 2004 related primarily to classifying assets as held for sale and writing

32

down the assets to expected selling prices, less closing costs ($7,419,000) and losses from operations ($3,307,000) net of net gains from 2004 asset disposition transactions ($289,000).

The 2003 loss is primarily attributable to an impairment provision by the Wellsford/Whitehall venture and related charges during the fourth quarter of 2003. Annually, after the preparation of budgets for the following year and as part of the financial statement closing process, Wellsford/Whitehall performs evaluations for impairment on all of its real estate assets. As part of the fiscal 2003 evaluation, Wellsford/Whitehall recorded an impairment charge of approximately $114,700,000 related to 12 assets in the portfolio during the fourth quarter of 2003. The provision was not the result of a change in the intended use of such assets. However, it was the result of several factors including, but not limited to, a continued deterioration of and outlook for the suburban office submarkets where Wellsford/Whitehall's properties are situated. Specifically, these included decreasing market rents, slower absorption trends and greater tenant concession costs. The Company's share of this impairment charge was approximately $37,377,000 in 2003. Additionally, as a result of the Wellsford/Whitehall charge, the Company wrote-off the balance of unamortized warrant costs of $2,644,000 related to Wellsford/Whitehall and determined at that time that it was not appropriate to carry the balance of the net deferred tax asset attributable to NOL carryforwards and recorded a valuation allowance of $6,680,000 in the fourth quarter of 2003.

Rental revenue decreased $890,000. This decrease is due to the impact of rent concessions in excess of the 2003 period at all phases of Palomino Park ($992,000) and the gradual elimination of rental operations at the Silver Mesa phase resulting from unit sales and all units being classified as sales inventory by December 31, 2003, whereas more units were being rented during the 2003 period as compared to the 2004 period ($651,000), offset by increased average physical occupancy of 93% for 2004 from 90% for 2003 at the Blue Ridge, Red Canyon and Green River phases at Palomino Park ($753,000).

Revenues from sales of residential units and the associated cost of sales from such units were $12,288,000 and $10,131,000, respectively, from 53 Silver Mesa unit sales during 2004 and were $12,535,000 and $10,708,000, respectively, from 56 sales during the corresponding 2003 period. The average pre-tax income from 2004 unit sales was approximately $8,100 greater per unit than in the corresponding 2003 period as a result of a reduced commission rate on the units sold, revised downward estimates of total project costs in 2004 and no interest costs included in cost of sales in 2004 as the outstanding debt balance was repaid in May 2003.

Interest revenue decreased $6,254,000. This decrease is due to reduced interest of $6,729,000 on loans from lower average outstanding loan balances in the 2004 period as compared to the 2003 period (including $2,275,000 related to the loss of revenue during the 2004 period and the receipt of a $4,368,000 yield maintenance penalty from the 277 Park Loan prepayment in September 2003) and $40,000 of non-recurring income earned in 2003 in excess of 2004 amounts, offset by increased interest earned on cash and U.S. Government securities of $515,000 from a higher average outstanding investable cash and securities balance during the current period versus the comparable 2003 period.

Fee revenue decreased $563,000. Asset disposition fees payable by Whitehall derived from Wellsford/Whitehall sales amounted to $46,000 during 2004, as compared to fees of $430,000 earned in the 2003 period. The Company's management fees for its role in the Second Holding investment decreased $179,000 for the 2004 period from the 2003 period. Fee revenue during the current period was impacted by changes in the amount of assets under management by Second Holding as a result of the 2004 decision not to purchase any new assets and allow the run-off of existing investments and by the sale of the Company's interest in the venture in November 2004.

Property operating and maintenance expense decreased $108,000. This decrease is primarily the result of a decline in operating expenses for the Silver Mesa phase from continuing unit sales during 2003 and 2004 of $427,000 (see sales discussion above), offset by the effect of net increases for property operating and maintenance expenses at the other phases of Palomino Park of $246,000 (including increases in replacements, advertising, payroll and utility costs, offset by decreases in certain maintenance cost categories) and period costs in 2004 for the consolidated development projects of $73,000.

33

The decrease in real estate taxes of $106,000 is primarily attributable to reduced taxes from fewer Silver Mesa units from continuing sales ($77,000) and reduced taxes on the Gold Peak land from a lower assessment and the commencement in September 2004 of capitalizing taxes to the project basis during development ($35,000).

Depreciation and amortization expense decreased $3,900,000. This decrease is primarily attributable to the Company expensing $4,021,000 of unamortized warrant costs in 2003, including the remaining unamortized balance of $2,644,000 which was written-off at December 31, 2003 in connection with the impairment charge recorded by Wellsford/Whitehall with no comparable expense in the 2004 period. The decrease is additionally impacted by no depreciation expense recorded on the Silver Mesa units as all of the units were transferred from operations to residential units available for sale during 2003 ($103,000), offset by additional amortization related to the Clairborne Fordham venture recorded during 2004 ($160,000) and the write-off of unamortized Second Holding basis differences of $68,000 upon the sale of the Company's investment in November 2004.

Aggregate interest expense increased $1,665,000. This increase is attributable to interest expense and deferred cost amortization on $25,775,000 of Debentures during the period ($2,100,000) as a result of the adoption of FIN46R and the de-consolidation of the Convertible Trust Preferred Securities, as previously described, whereas such expense was treated as a distribution in the 2003 period. The increase is also attributable to the Green River phase as the 2004 period includes interest for the entire period at a higher fixed rate on a larger average outstanding balance on the permanent financing, whereas during the 2003 period, there was a lower variable interest rate on a lower amount of construction financing until the permanent financing was in place in February 2003 ($62,000). In addition, the 2004 period had a higher average base interest rate on the Palomino Park Bonds as compared to the 2003 period ($50,000) due to rising interest rates during 2004. These increases were offset by lower average outstanding principal balances with respect to the other Palomino Park phases' loans ($60,000) and capitalized interest of $490,000 in 2004 with only $3,000 capitalized in the 2003 period. The Company began the capitalization of interest on its new residential developments upon the determination that such developments would be commenced (East Lyme capitalization began in June 2004 upon acquisition of the land, Gold Peak capitalization began in September 2004 and Claverack capitalization began in November 2004 upon formation of the venture when our 25% partner contributed the land).

General and administrative expenses increased $2,680,000 as described below:

	For the Years Ended December 31,
	2004		2003		Increase (Decrease)
General and administrative expense per Statements of Operations	$	8,270,768	$	5,590,971	$	2,679,797
Less non-cash component of general and administrative
expenses for:
Amortization of stock generally issued into deferred
compensation plan		--		277,664		(277,664	)
Expensing of stock options		71,500		93,600		(22,100	)
Total non-cash component of general and administrative expenses		71,500		371,264		(299,764	)
Cash component of general and administrative expenses	$	8,199,268	$	5,219,707	$	2,979,561

The principal reasons for the increase in the cash component of general and administrative expenses are the costs to retain an investment banker ($1,000,000), increased fees for both the 2004 annual audit and the new Sarbanes-Oxley Act internal control evaluation requirements to our principal independent accountants ($660,000), a contractual payment to the Chairman of the Company upon the sale of Second Holding ($643,000) and other additional costs for compliance with the Sarbanes-Oxley Act, including the costs of another accounting firm to assist the Company in this process.

The Company recognized a (loss) of $(23,715,000) during the year ended December 31, 2004 from its joint venture investments as compared to a loss of $(34,429,000) in 2003. An analysis of the change follows:

34

	For the Years Ended December 31,
	2004			2003			(Decrease) Increase
Wellsford/Whitehall:
(Loss) from operations (A)	$	(3,307,000	)	$	(2,126,000	)	$	(1,181,000	)
Net gain from asset disposition transactions (B)		289,000			3,030,000			(2,741,000	)
Impairment provisions (C)		(7,419,000	)		(37,377,000	)		29,958,000
(Loss) from Wellsford/Whitehall		(10,437,000	)		(36,473,000	)		26,036,000
Second Holding (D)		(13,790,000	)		1,640,000			(15,430,000	)
Clairborne Fordham		512,000			405,000			107,000
Other		--			(1,000	)		1,000

(Loss) from joint ventures $ (23,715,000 ) $ (34,429,000 ) $ 10,714,000

(A)	The periods were impacted by the sale of properties during 2004 and 2003, lower average occupancy and declines in rental rates.
(B)	Amounts reflect the net gains from the disposition of eight properties in 2004 and eleven properties in 2003.
(C)	Impairment provisions recorded at December 31, 2004 relate primarily to classifying assets as held for sale and writing down the assets to expected selling prices, less closing costs. The 2003 impairment primarily related to significant declines in the economics of the properties as previously described herein.
(D)	The loss for 2004 is the result of (i) a $12,930,000 net impairment charge taken by Second Holding (of which the Company's share was $6,606,000) related to the write-down of one of its investments during the first quarter of 2004, offset by a partial recovery when the investment was sold in the second quarter of 2004 and (ii) a $9,000,000 impairment charge recorded by the Company at September 30, 2004 related to the ultimate sale of its interest in the venture in November 2004.

Minority interest changed $3,000 to a benefit of $88,000 in the 2004 period from a benefit of $85,000 in the 2003 period, primarily attributable to the formation of two development entities with minority partners who share in each respective development project's current period losses ($32,000) and a minority interest benefit related to the consolidation of an entity in accordance with the provisions of FIN46R ($29,000), offset by a reduction in the minority interest benefit for Palomino Park ($58,000).

The change in income tax expense to a benefit of $130,000 in 2004 compared to an expense of $7,135,000 in 2003 results primarily from the Company recording an increased valuation allowance against deferred tax assets in 2003.

The change in after tax cost of the Convertible Trust Preferred Securities results from classifying this expense for the 2004 period into interest expense as a result of the adoption of FIN46R (see interest expense discussion).

Income from discontinued operations, after taxes, reflects the reclassification of the revenue and expenses from the two VLP properties in the Debt and Equity Activities SBU as a result of the change in classification to held for sale at June 30, 2003. The income from discontinued operations, net of taxes, was $725,000 and $20,000 for the years ended December 31, 2004 and 2003, respectively. The change between the two periods is primarily attributable to the sale of the remaining property during April 2004, at which time, the Company recognized a reversal of an impairment reserve upon the completion of that sale and recognized contingent proceeds from a 2003 property sale during 2004, the sum of which aggregated $809,000. That amount was partially offset by the loss of operating income between the periods and the effect of state income taxes.

Income Taxes

The Company has recorded net deferred tax liabilities of approximately $581,000 and $248,000 at December 31, 2005 and 2004, respectively, which are included in accrued expenses and other liabilities in the accompanying Consolidated Statement of Net Assets in Liquidation and Consolidated Balance Sheet, respectively. The primary reason for the increase was the adoption of the liquidation basis of accounting for assets and liabilities which caused a net $443,000 increase in net deferred tax liabilities, offset by a $109,000 reduction from the realization for tax purposes of certain timing differences in 2005.

35

Management has determined that valuation allowances of approximately $33,984,000 and $53,628,000 at December 31, 2005 and 2004, respectively, are necessary. The valuation allowance at December 31, 2005 and 2004 primarily relates to reserving a substantial portion of the NOLs, the impact of deferred compensation arrangements and alternative minimum tax credit carryforwards. The 2005 amount also includes reserving all of the assets where the tax basis is greater than the liquidation value and a portion of the reserve for estimated liquidation costs. The 2004 amount also includes reserving the differences in the basis of the Company's investment in Wellsford/Whitehall. As a result of the significant tax gain on the sale of the Company's Palomino Park rental project together with the realization for tax purposes of almost all of the Wellsford/Whitehall tax basis differences and the utilization of a portion of available NOLs to offset the Palomino Park gain, the Company was able to reduce the valuation allowance from the 2004 amount. This accounts for the $19,644,000 net reduction in the allowance during the year ended December 31, 2005.

The Company has NOL carryforwards, for Federal income tax purposes, resulting from the Company's merger with VLP in 1998 and its operating loss in 2004. The NOLs aggregate approximately $61,100,000 at December 31, 2005, expire in the years 2007 through 2024 and are subject to an annual and aggregate limit on utilization of NOLs after an ownership change, pursuant to Section 382 of the Internal Revenue Code. Ownership changes set forth in Section 382 may have occurred during 2005. Any limitation on the utilization of NOLs may be mitigated as a result of recognizing any net unrealized built-in gains that existed at ownerhip change dates. If the Company determines that such a change in ownership did occur during 2005, there would not be a material impact to the accompanying consolidated financial statements.

Liquidity and Capital Resources

Consolidated for the Company

The Company expects to meet its short-term liquidity requirements, such as operating expenses, construction and development costs, the purchase of EQR's remaining interest in the Palomino Park project and debt repayments or additional collateral for construction loans, generally through its available cash, the sale of the Beekman interests, the sale of Reis, the sale of other assets, releases from escrow reserves, distributions from Clairborne Fordham, interest revenue and proceeds from construction financings, refinancings, modifications to borrowing capacity on existing construction loans and the ability to extend maturity dates on existing construction financings through the use of available extension options.

The Company expects to meet its long-term liquidity requirements such as operating costs through the termination of the Plan, maturing mortgages, construction and development costs and debt service on construction notes payable through the use of available cash, sales of condominium units, single family homes and land, the sale of Reis and proceeds from construction financing, refinancings, modifications to borrowing capacity on existing construction loans and the ability to extend maturity dates on existing construction financings through the use of available extension options.

The East Lyme Construction Loan requires the Company to have a minimum net worth, as defined, of $50,000,000. As a result of the December 14, 2005 distribution of approximately $90,597,000 to the stockholders, the Company may be required to make an additional $2,000,000 cash collateral deposit for the East Lyme Construction Loan and a $2,000,000 paydown of the Gold Peak Construction Loan. The Company is required to maintain minimum liquidity levels at each quarter end for the East Lyme and Gold Peak Construction Loans, the most restrictive of which is $10,000,000.

The Company had an aggregate of $41,027,000 of cash and cash equivalents at December 31, 2005 and considers such amount to be adequate and expects it to continue to be adequate to meet operating and lender liquidity requirements both in the short and long terms.

Material Contractual Obligations

36

The following table summarizes the Company's material contractual obligations as of December 31, 2005:

(amounts in thousands)	Payments Due
	For the Year Ended		For the Years Ended December 31,
Contractual Obligations	December 31, 2006		2007 and 2008		2009		Aggregate
Principal payments for mortgage
notes and construction loans
payable	$	449	$	7,226	$	11,575	$	19,250
Operating lease for office		815		1,495		--		2,310
Total contractual obligations	$	1,264	$	8,721	$	11,575	$	21,560

Capital Expenditures for Operating Assets and Development Projects

The following table describes the current estimated capital expenditure requirements for development projects:

(amounts in thousands)	Total Expected		Expected Amount Funded by
Project	Capital Expenditure Requirement for 2006		Construction Financings		The Company		Partner
Gold Peak	$	25,632	$	23,879	$	1,753	$	--
East Lyme #1		13,584		10,344		3,240		--
East Lyme #2		783		--		783		--
Claverack		1,872		1,142		548		182
	$	41,871	$	35,365	$	6,324	$	182

Gold Peak

In 2004, the Company commenced the development of the final phase of Palomino Park known as Gold Peak. Gold Peak will be comprised of 259 condominium units to be built in three sections on the remaining 29 acre land parcel at Palomino Park. At December 31, 2005, there were 84 Gold Peak units under contract with nominal down payments. Gold Peak unit sales commenced in January 2006.

In April 2005, the Company obtained development and construction financing for Gold Peak in the aggregate amount of approximately $28,800,000, which bears interest at LIBOR + 1.65% per annum and mature in November 2006 with respect to the development loan and in November 2009 with respect to the construction loan, both of which have additional extension options upon satisfaction of certain conditions being met by the borrower. The balance of the Gold Peak Mortgage was approximately $11,575,000 at December 31, 2005. Principal repayments will be made as units are sold. The Company has purchased a 5% LIBOR cap expiring in June 2008 for this loan.



East Lyme

The Company has a 95% ownership interest as managing member of a venture which owns 101 single family home lots situated on 139 acres of land in East Lyme, Connecticut upon which it is constructing houses for sale. The Company purchased the land for $6,200,000 in June 2004. During the fourth quarter of 2005, the model home was completed. The completion of additional homes and closings of initial sales are expected to occur in 2006.

After purchasing the land, the Company executed an agreement with a Homebuilder who will construct and sell the homes for this project and is a 5% partner in the project along with receiving other consideration. The Company extended a loan to the Homebuilder of $157,500 at a rate of 6% per annum which was used by the Homebuilder to finance one-half of his 5% investment in East Lyme. The loan matures upon the termination of the development agreement.

37

The Company obtained construction financing in the aggregate amount of $21,177,000 (to be drawn upon as costs are expended), which bears interest at LIBOR + 2.15% per annum and matures in December 2007 with two one-year extensions at the Company's option upon satisfaction of certain conditions being met by the borrower. The balance of the East Lyme Construction Loan was approximately $7,226,000 and $361,000 at December 31, 2005 and 2004, respectively. The Company has purchased a 4% LIBOR cap expiring July 2007 for this loan.

The Company executed an option to purchase from the seller of the initial East Lyme land parcel a contiguous parcel of land which can be used to develop 60 single family homes and subsequently acquired the parcel in November 2005 for $3,720,000, including future costs which were the obligation of the seller. The East Lyme Land requires remediation of pesticides used on the property when it was an apple orchard, the cost of which has been considered in evaluating the carrying amount of the property at December 31, 2005.

The bank providing the East Lyme Construction Loan has also provided a $3,000,000 letter of credit to a municipality in connection with the East Lyme project. The Company has posted $1,300,000 of restricted cash as collateral for this letter of credit.

Claverack

The Company has a 75% ownership interest in a joint venture that owns two land parcels aggregating approximately 300 acres in Claverack, New York. The Company acquired its interest in the joint venture for $2,250,000 in November 2004. One land parcel is subdivided into seven single family home lots on approximately 65 acres upon which Claverack intends to build and sell custom designed homes. The remaining 235 acres, known as The Stewardship, are currently subdivided into six single family home lots with the intent to obtain an increase in the number of developable residential lots to 49 lots, improve the land, obtain construction financing and construct and sell single family homes. The completion of initial homes and closings of initial sales are expected to occur in 2007.

Claverack is capitalized with $3,000,000 of capital, the Company's share of which was contributed in cash and the 25% partner's contribution was the land, subject to liabilities, at a net value of $750,000. The land was subject to a $484,000 mortgage which was assumed by the joint venture (the balance of this mortgage was $465,000 at December 31, 2004, bore interest at a rate of 7% per annum and had a maturity of February 2010). At the closing, an aggregate of approximately $866,000 owed to affiliates of the 25% partner was paid from the amount contributed by the Company.

In December 2005, Claverack obtained a line of credit construction loan in the aggregate amount of $2,000,000 which was used to retire the Claverack Mortgage and will be used to construct a custom design model home during 2006 until permanent construction financing is obtained. The Claverack Construction Loan bears interest at LIBOR + 2.20% per annum and matures in December 2006 with a six month extension at the Company's option upon satisfaction of certain conditions being met by the borrower. The balance of the Claverack Construction Loan was approximately $449,000 at December 31, 2005.

The Claverack venture has approximately $62,000 of cash at December 31, 2005. On January 13, 2006, the Claverack partners contributed additional capital aggregating approximately $701,000, of which the Company's share was approximately $526,000.

Beekman

In February 2005, the Company acquired a 10 acre parcel in Beekman, New York for a purchase price of $650,000. The Company also entered into a contract to acquire a contiguous 14 acre parcel, the acquisition of which was conditioned upon site plan approval to build a minimum of 60 residential condominium units. The Company's $300,000 deposit in connection with this contract was secured by a first mortgage lien on the property.

38

As a result of various uncertainties including that the governmental approval and development processes may take an indeterminate period and extend beyond December 31, 2008, the Board authorized the sale of the Beekman interests to the Company's Chairman and former President, or a company in which they have ownership interests, at the greater of the Company's costs or appraised values. On January 27, 2006, a company which is owned by Messrs. Lynford and Lowenthal, the principal of the Company's joint venture partner in the East Lyme project and others acquired the Beekman project at the Company's aggregate cost of approximately $1,297,000. This was accomplished through a sale of the entities that owned the Beekman project.

Other Items Impacting the Company's Liquidity and Resources

Clairborne Fordham

In October 2000, the Company and Prudential Real Estate Investors, an affiliate of Prudential Life Insurance Company, organized Clairborne Fordham, a venture in which the Company has a 10% interest. The Company's investment in Clairborne Fordham was approximately $453,000 (liquidation basis) and approximately $2,190,000 (going concern basis) at December 31, 2005 and 2004, respectively. Clairborne Fordham intends to continue the orderly sale of the remaining two residential units in 2006.

The Effects of Inflation/Declining Prices and Trends on the Sale of Condominiums and Homes

As of December 31, 2005, the Company completed the sell-out of the 264 unit Silver Mesa condominium project. For 2005, the Company did not report any meaningful revenue and cost of sales of residential units and will not until the Company commences closings on the sale of condominiums and homes at the Gold Peak and East Lyme development projects in 2006. The impact on cash flows to the Company will be minimal during the early years of development and sales as substantially all of the net sales proceeds from these projects will be utilized to repay related construction loans.

The continuing increases in energy costs, construction materials (such as concrete, lumber and sheetrock) and interest rates could adversely impact our home building businesses. As these costs increase, our product becomes more expensive to build and profit margins could deteriorate. In order to maintain profit margin levels, we may need to increase sale prices of our condominiums and homes. The continuing rise in energy costs and interest rates may negatively impact our marketing efforts and the ability for buyers to afford our homes at any price level, which could result in the inability to meet targeted sales prices or cause sale price reductions. The Company has limited its exposure from the effects of increasing interest on its construction loans by purchasing interest caps for the East Lyme and Gold Peak projects. The East Lyme cap of LIBOR at 4% has already been met. The Gold Peak cap is for LIBOR at 5%.

The number and timing of future sales of any residential units by the Company or by its joint ventures could be adversely impacted by increases in interest rates and the availability of credit to potential buyers in 2006, whereas during 2005 and 2004, historically low interest rates may have benefited sales results.

Changes in Cash Flows

During the period November 18, 2005 to December 31, 2005

During the period November 18, 2005 to December 31, 2005, the Company sold its largest asset, the Palomino Park rental phases and realized net cash of approximately $70,109,000 after debt payments, debt prepayment costs, sales expenses, closing costs, EQR's interest in the sales proceeds and estimated state and Federal taxes. Such amount plus available cash was used to pay the initial liquidating distribution of $14.00 per common share to stockholders (aggregating approximately $90,597,000) on December 14, 2005. Additionally, the Company incurred construction costs of approximately $4,021,000 which was funded in part by approximately $2,423,000 of construction loan proceeds.

39

Comparison of January 1, 2005 through November 17, 2005 to the year ended December 31, 2004

Cash flows used in operating activities increased $7,347,000 from $9,249,000 used in the year ended December 31, 2004 to $16,596,000 used in the period January 1, 2005 to November 17, 2005. The significant components of this change related to (i) a net (loss) of $32,703,000 in the 2004 period primarily due to impairment charges of $15,606,000 from the Company's investment in Second Holding and $7,419,000 from the Company's investment in Wellsford/Whitehall (as previously described in Results of Operations), (ii) net income of $3,018,000 in the 2005 period which included a gain of $5,986,000 from the redemption of the Company's interest in Wellsford/Whitehall, (iii) the effects of selling 51 fewer condominium units at Silver Mesa in 2005 as compared to 2004 ($8,529,000) and (iv) an increase in construction in process, net of construction payables, of $9,156,000 (primarily from continuing construction at the Company's Gold Peak and East Lyme development projects and the 2005 land acquisitions for Beekman and the additional East Lyme land parcel, whereas the 2004 period included the acquisition of the initial East Lyme land parcel and other pre-construction costs at East Lyme and Gold Peak.

Cash flows provided by investing activities increased $16,098,000 from $20,616,000 provided during the year ended December 31, 2004 to $36,714,000 provided during the period January 1, 2005 to November 17, 2005. The increase is primarily the redemption of $25,000,000 of U.S. Government securities during 2005. Such increase was offset by the following decreases between the periods: (i) return of capital and proceeds from sales and redemptions of investments in joint ventures decreased $3,141,000 (the 2004 period included $15,000,000 of proceeds from the sale of the Company's Second Holding interests and the 2005 period included net proceeds of $8,193,000 from the September 2005 redemption of the Company's interest in Wellsford/Whitehall with the remaining change due to returns of capital during 2005 in excess of 2004), (ii) the 2004 period included the proceeds from the sale of a real estate asset by the Company in April 2004 ($2,694,000), (iii) the 2005 purchase of half of EQR's minority interest in the Palomino Park project ($2,087,000) and (iv) a decrease in the amount of proceeds from the repayment of mortgage notes receivable between the periods ($1,032,000).

Cash flows used in financing activities increased $23,557,000 from $881,000 used in the year ended December 31, 2004 to $24,438,000 used in the period January 1, 2005 to November 17, 2005. This increase is primarily attributable to the $25,775,000 redemption of Debentures during April 2005 and the retirement of $12,680,000 of Palomino Park Bonds ($2,275,000 in January 2005 and $10,405,000 in May 2005). Such increases were offset in part by an increase in aggregate borrowings of $15,771,000 under the Gold Peak and East Lyme Construction Loans.

Comparison of the year ended December 31, 2004 to the year ended December 31, 2003

Cash flow from operating activities changed $26,341,000 from $17,190,000 provided in 2003 to $9,151,000 used in 2004. The primary reasons for the change in operating cash flows from 2003 to 2004 include (i) an increase in construction in process of $10,299,000 from the acquisition of the East Lyme land and development costs capitalized on the Company's residential development projects during 2004, (ii) increases to restricted cash primarily for deposits related to development projects ($1,695,000) and cash restricted for use by joint ventures ($1,178,000), (iii) $6,842,000 for deferred tax provisions in 2003 with a $300,000 benefit in 2004 and (iv) reduced depreciation in 2004 of $4,012,000 primarily from fully depreciated unamortized warrant costs for Wellsford/Whitehall. Operating cash flows will continue to be negatively impacted by increases to construction in process until such time as sales of homes and condominiums commence.

Cash provided by investing activities increased $17,862,000 from 2003 to 2004. The increase between these periods is primarily from proceeds from the sale of the Company's investment in Second Holding in November 2004 for $15,000,000. During 2003, the 277 Park Loan of $25,000,000 was repaid and the Company utilized those proceeds, plus additional cash to purchase $27,500,000 of U.S. Government securities.

Cash flow used in financing activities decreased $2,170,000 from 2003 to 2004. The primary financing activity in 2003 was the $40,000,000 Green River Mortgage, the proceeds from which were used to repay $37,111,000 for a maturing construction loan on the Green River property. Additionally in 2003, the remaining $4,318,000

40

Silver Mesa Conversion Loan balance was repaid with available cash. During 2004, the Company obtained the East Lyme Construction Loan of which $361,000 was advanced by December 31, 2004.

Risks Associated with Forward-Looking Statements

This Form 10-K, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following, which are discussed in greater detail in the "Risk Factors" section of this annual report on Form 10-K: general and local economic and business conditions; future valuation adjustments as a result of possible declines in the expected values and cash flows of residential development projects and investments or changes in the intent with regards to such projects and investments; competition; risks of real estate development, construction and renovation including construction delays and cost overruns; inability to comply with zoning and other laws and obtain governmental approvals; the risk of inflation in development costs (including construction materials); the availability of insurance coverages; the inability to obtain or replace construction financing for development projects; adverse consequences of debt financing including, without limitation, the necessity of future financings to repay maturing debt obligations; inability to meet financial and valuation covenants contained in loan agreements; inability to repay financings; exposure to variable rate based financings; risk of foreclosure on collateral; risks of leverage; risks associated with equity investments in and with third parties; risks associated with our reliance on joint venture partners including, but not limited to, the inability to obtain consent from partners for certain business decisions, the potential risk that our partners may become bankrupt, have economic or other business interests and objectives which may be inconsistent with those of the Company and our partners being in a position to take action contrary to our interests; inability and/or unwillingness of partners to provide their share of any future capital requirements; availability and cost of financing; interest rate risks; demand by prospective buyers of condominiums and single family homes; inability to realize gains from sales of condominiums and single family homes; lower than anticipated sales prices; inability to close on sales of properties; the risks of seasonality and increasing interest rates on the Company's ability to sell condominium units and single family homes; increases in energy costs, construction materials and interest rates could adversely impact our home building business as homes become more expensive to build and profit margins could deteriorate; inability to raise sale prices to maintain profit margins; the negative impact from a continuing rise in energy costs and interest rates on our marketing efforts and the ability for buyers to afford our homes at any price level, which could result in the inability to meet targeted sales prices or cause sales price reductions; environmental risks; inability of Reis to be sold at all, for the amount of proceeds used by the Company in valuing Reis, or on terms that are favorable to the Company; the Board could abandon the Plan; failure to achieve proceeds from the sales of assets to meet the estimated ranges of total distributions to stockholders under the Plan; the uncertainty as to the timing of sales of assets and the impact on the timing of distributions to stockholders; illiquidity of real estate assets and joint venture investments; increases in expenses which would negatively impact the amount of distributions pursuant to the Plan; unknown claims and liabilities which would negatively impact the amount of distributions pursuant to the Plan; the sale of undeveloped land, rather than the construction and sale, in the normal course of business, of single family homes or condominium units which would negatively impact the amount of distributions pursuant to the Plan; the inability to utilize all of the Company's Federal net operating loss carryforwards; and other risks listed from time to time in the Company's reports filed with the SEC. Therefore, actual results could differ materially from those projected in such statements.

41

Item 7a.

Quantitative and Qualitative Disclosures about Market Risk.

One of the Company's primary market risk exposures has been to changes in interest rates. The Company and its joint venture investments each generally managed this risk by offsetting its investments and financing exposures to the extent possible as well as by strategically timing and structuring its transactions. The investments described below were generally made for long-term investing and not for trading purposes. The following table presents the effect of a 1.00% increase in the base rates at December 31, 2004 on all variable rate notes receivable, investments in U.S. Government securities and debt and its impact on annual net income (loss):

(amounts in thousands, except per share amounts)	Balance at December 31, 2004		Effect of 1% Increase in Base Rate on Income (Expense)
Consolidated assets and liabilities:
Notes receivable; fixed rate	$	1,190	$	--
Investment in U.S. Government securities:
Fixed rate	$	27,551		--
Mortgage notes payable:
Variable rate (A)	$	13,041		(127	)
Fixed rate		95,812		--
	$	108,853		(127	)
Debentures/Convertible Trust Preferred
Securities:
Fixed rate	$	25,775		--
Proportionate share of assets and liabilities from
investments in joint ventures:
Wellsford/Whitehall:
Debt:
Variable rate	$	40,100		(401	)
Fixed rate		5,569		--
	$	45,669
Effect from Wellsford/Whitehall				(401	)
Net decrease in annual income, before minority
interest benefit and income tax benefit				(528	)
Minority interest benefit				18
Income tax benefit				--
Net decrease in annual net income			$	(510	)
Per share, basic and diluted			$	(0.08	)

(A) Excludes the effect of a 1% change on variable rate construction financing as such interest is capitalized to the basis of the project and does not have a current impact on income (loss).

42

At December 31, 2005, the Company's only exposure to interest rates was for variable rate based construction loans. Such exposure was minimized through the use of interest rate caps. The following table presents the effect of an increase in interest rates on construction loans at December 31, 2005:

(amounts in thousands)	Balance at December 31, 2005	LIBOR Cap		LIBOR at December 31, 2005		Interest Rate Exposure		Additional Interest Incurred
Construction loans payable:
With interest rate caps:
Gold Peak Construction Loan	$11,575	5.00	%	4.39	%	0.61	%	$  71	(A)(B)
East Lyme Construction Loan	7,226	4.00	%	4.39	%	--		--
	18,801							71
Without interest rate cap:
Claverack Construction Loan	449	--		4.39	%	(C)		4	(B)(C)
	$19,250							$  75

(A)	Represents an increase in LIBOR up to the interest rate cap.
(B)	An increase in interest incurred would result in additional interest being capitalized into the basis of this project.
(C)	The Claverack Construction Loan can be drawn upon up to $2,000,000. The effect of a 1% increase in LIBOR on this loan if the entire balance were outstanding would be $20,000 per annum. This table presents the effect of a 1% increase on the December 31, 2005 outstanding balance.

Item 8.	Financial Statements and Supplementary Data.
The response to this Item 8 is included as a separate section of this annual report on Form 10-K starting at page F-1.
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A.	Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in the Exchange Act Rule 15d-15(e). Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in enabling the Company to record, process, summarize and report information required to be evaluated in the Company's periodic filings within the required time period. There have been no significant changes in the Company's internal controls over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, that occurred during the quarter ended December 31, 2005. Management Report On Internal Control Over Financial Reporting. Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

43

As of December 31, 2005, management assessed the effectiveness of the Company's internal control over financial reporting based on the framework established in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management has determined that the Company's internal control over financial reporting was effective as of December 31, 2005.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this annual report on Form 10-K, has issued an attestation report on management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2005. The report, which expresses unqualified opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting as of December 31, 2005, is included with the requirements of Item 8 as a separate section of this annual report on Form 10-K on page F-3.

Item 9B.	Other Information.
None. PART III
Item 10.	Directors and Executive Officers of the Registrant.
The executive officers and directors of the Company, their ages and their positions are as follows:

Name	Age	Positions and Offices Held
Jeffrey H. Lynford	58	Chairman of the Board, Chief Executive Officer,President and Director***
James J. Burns	66	Senior Vice President, Chief Financial Officer and Secretary
William H. Darrow II	58	Vice President
David M. Strong	47	Senior Vice President of Development
Mark P. Cantaluppi	35	Vice President, Chief Accounting Officer
Bonnie R. Cohen	63	Director*
Douglas Crocker II	65	Director***
Meyer S. Frucher	59	Director*
Mark S. Germain	55	Director***
Edward Lowenthal	61	Director**

*	Term expires during 2006.
**	Term expires during 2007.
***	Term expires during 2008.

The information contained in the sections captioned "Nominees for Election as Directors", "Other Directors" and "Executive Officers" of the Company's definitive proxy statement for the 2006 annual meeting of stockholders is incorporated herein by reference.

44

Item 11.	Executive Compensation.
The information contained in the sections captioned "Compensation of Directors", "Executive Compensation", "Employment Agreements", and "Management Incentive Plans" of the Company's definitive proxy statement for the 2006 annual meeting of stockholders is incorporated herein by reference.

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information contained in the section captioned "Security Ownership of Certain Beneficial Owners and Management" and "Related Shareholder Matters" of the Company's definitive proxy statement for the 2006 annual meeting of stockholders is incorporated herein by reference.
Item 13.	Certain Relationships and Related Transactions.
The information contained in the section captioned "Certain Transactions" of the Company's definitive proxy statement for the 2006 annual meeting of stockholders is incorporated herein by reference.

Item 14.	Principal Accountant Fees and Services.
The information contained in the section captioned "Principal Accountant Fees and Services" of the Company's definitive proxy statement for the 2006 annual meeting of stockholders is incorporated herein by reference.
PART IV
Item 15.	Exhibits and Financial Statement Schedules.

(a)	(1)	Financial Statements
		The following consolidated financial statements are included as a separate section of this annual report
		on Form 10-K (commencing on page F-1):
		Consolidated Statement of Net Assets in Liquidation (liquidation basis) at December 31, 2005
		Consolidated Statement of Changes in Net Assets in Liquidation (liquidation basis) for the Period
		November 18, 2005 to December 31, 2005
		Consolidated Balance Sheet (going concern basis) at December 31, 2004
		Consolidated Statements of Operations (going concern basis) for the Period January 1, 2005 to
		November 17, 2005 and for the Years Ended December 31, 2004 and 2003
		Consolidated Statements of Changes in Shareholders' Equity (going concern basis) for the Period
		January 1, 2005 to November 17, 2005 and for the Years Ended December 31, 2004 and 2003
		Consolidated Statements of Cash Flows for the Period November 18, 2005 to December 31, 2005
		(liquidation basis), for the Period January 1, 2005 to November 17, 2005 and for the Years
		Ended December 31, 2004 and 2003 (going concern basis)
		Notes to Consolidated Financial Statements
		Wellsford/Whitehall Group, L.L.C. Consolidated Financial Statements and Notes

45

(2)	Financial Statement Schedules
	III.           Real Estate and Accumulated Depreciation.
	All other schedules have been omitted because the required information of such other schedules is not
	present, is not present in amounts sufficient to require submission of the schedule or is included in the
	consolidated financial statements.
(3)	Exhibits

(a)	Exhibit No.	Description †
	2.1	Plan of LIquidation *
	3.1	Articles of Amendment and Restatement of the Company. ****
	3.2	Articles Supplementary Classifying 350,000 Shares of Common Stock as Class A Common Stock. ****
	3.3	Articles Supplementary Classifying 2,000,000 Shares of Common Stock as Series A 8%
		Convertible Redeemable Preferred Stock. ****
	3.4	Amended and Restated Bylaws of the Company. ~~~~~
	3.5	Articles Supplementary reclassifying and designating 350,000 shares of unissued Common
		Stock as Class A-1 Common Stock, dated as of May 5, 2000.†††††
	4.1	Specimen certificate for Common Stock. ***
	4.2	Specimen certificate for Class A Common Stock. ****
	4.3	Specimen certificate for Series A 8% Convertible Redeemable Preferred Stock. ****
	10.1	Common Stock and Preferred Stock Purchase Agreement by and between the Company and ERP Operating Limited Partnership, dated as of May 30, 1997. ****
	10.2	Registration Rights Agreement by and between the Company and ERP Operating Limited Partnership dated as of May 30, 1997. ****
	10.3	Agreement Regarding Common Stock and Preferred Stock Purchase Agreement, dated as of May 30, 1997, among ERP Operating Limited Partnership, the Company and BankBoston, as agent. ****
	10.4	1998 Management Incentive Plan of the Company. ++
	10.5	1997 Management Incentive Plan of the Company. **
	10.6	Rollover Stock Option Plan of the Company. **
	10.7	Amendment to Registration Rights Agreement, dated as of May 5, 2000, by and between Wellsford Real Properties, Inc. and ERP Operating Limited Partnership. †††††
	10.8	Wellsford Real Properties, Inc. Code of Business Conduct and Ethics for Directors, Senior Financial Officers, Other Officers and All Other Employees.††
	10.9	Employment Agreement between the Company and James J. Burns. ####
	10.10	Employment Agreement between the Company and Mark P. Cantaluppi. ~~
	10.11	Second Amended and Restated Employment Agreement, dated August 19, 2004, between the Company and Jeffrey H. Lynford. ######
	10.12	Third Amended and Restated Employment Agreement, dated October 19, 2004, between the Company and David M. Strong. ~
	10.12.1	Amendment to Third Amended and Restated Employment Agreement, dated March 8, 2006, between the Company and David M. Strong †††

46

Exhibit No.	Description (continued) †
10.13	Commercial Revolving and Construction Loan Agreement, dated December 23, 2004, between East Lyme Housing Ventures, LLC and Wachovia Bank, National Association. +
10.14	Promissory Note dated December 23, 2004, between East Lyme Housing Ventures, LLC and Wachovia Bank, National Association. +
10.15	Unconditional Guaranty dated December 23, 2004, by and among Wellsford Real Properties, Inc., East Lyme Housing Ventures, LLC and Wachovia Bank, National Association. +
10.16	Revolving Promissory Note dated December 23, 2004 between East Lyme Housing Ventures, LLC and Wachovia Bank, National Association. +
10.17	Development loan agreement, dated as of April 6, 2005, by and between Gold Peak at Palomino Park LLC and Key Bank National Association.~~~
10.18	Promissory Note for the $8,800,000 Development Loan, dated as of April 6, 2005, by Gold Peak at Palomino Park LLC as Maker to Key Bank National Association as Payee. ~~~
10.19	Payment Guaranty for the $8,800,000 Development Loan, dated as of April 6, 2005, by Wellsford Real Properties, Inc. as Guarantor to and for the benefit of Key Bank National Association as lender.~~~
10.20	Construction Loan Agreement, dated as of April 6, 2005, by and between Gold Peak at Palomino Park LLC and Key Bank National Association.~~~
10.21	Promissory Note for the $20,000,000 Construction Loan, dated as of April 6, 2005, by Gold Peak at Palomino Park LLC as Maker to Key Bank National Association as Payee.~~~
10.22	Payment Guaranty for the $20,000,000 Construction Loan, dated as of April 6, 2005, by Wellsford Real Properties, Inc. as Guarantor to and for the benefit of Key Bank National Association as lender.~~~
10.23	Redemption Agreement by and among Wellsford/Whitehall Group, L.L.C. and Wellsford Commercial Properties Trust, dated September 21, 2005.~~~~
10.24	Assignment and Assumption of Membership Interest, by and among Wellsford/Whitehall Group, L.L.C. and Wellsford Commercial Properties Trust, dated September 21, 2005.~~~~
10.25	Purchase and Sale Contract for Palomino Park, Douglas County, Colorado, by and between Park at Highlands, LLC, Red Canyon at Palomino Park, LLC, Green River at Palomino Park, LLC and Teachers Insurance and Annuity Association of America, dated August 26, 2005. #
10.26	Unconditional Guaranty by and among Claverack Housing Ventures, LLC, Sciame Development, Inc., Wellsford Real Properties, Inc. and Wachovia Bank National Association, dated December 15, 2005.
10.27	Amended and Restated Mortgage Note by and between Claverack Housing Ventures, LLC and Wachovia Bank National Association, dated December 15, 2005.
10.28	Building Loan Mortgage Note by and between Claverack Housing Ventures, LLC and Wachovia Bank National Association, dated December 15, 2005.
10.29	Building Loan Mortgage, Assignment of Rents and Security Agreement by and between Claverack Housing Ventures, LLC and Wachovia Bank National Association, dated December 15, 2005.
10.30	Purchase and Sale Agreement, dated as of January 27, 2006, between Wellsford Real Properties, Inc. and Beekman Acquisition, LLC.
21.1	Subsidiaries of the Registrant.
23.1	Consent of Ernst & Young LLP
23.2	Consent of Ernst & Young LLP
23.3	Consent of KPMG LLP

47

Exhibit No.	Description (continued) †
31.1	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
31.2	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes - Oxley Act of 2002.
32.1	Chief Executive Officer and Chief Financial Officer Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Previously filed with the Definitive Proxy Statement on Form 14A filed on October 11, 2005.
**	Previously filed as an exhibit to the Form 10/A Amendment No. 1 filed on May 21, 1997.
***	Previously filed as an exhibit to the Form 10/A Amendment No. 2 filed on May 28, 1997.
****	Previously filed as an exhibit to the Form S-11 filed on July 30, 1997.
†	Wellsford acquired its interest in a number of these documents by assignment.
††	Previously filed as an exhibit to the Form 8-K filed on November 18, 2005.
†††	Previously filed as an exhibit to the Form 8-K filed on March 13, 2006.
†††††	Previously filed as an exhibit to the Form 8-K filed on May 11, 2000.
+	Previously filed as an exhibit to the Form 10-K filed on March 15, 2005.
++	Previously filed as an exhibit to the Form 10-K filed on March 31, 1999.
++++++	Previously filed as an exhibit to the Form 10-K filed on March 26, 2003.
#	Previously filed as an exhibit to the Form 10-Q filed on November 8, 2005.
####	Previously filed as an exhibit to the Form 10-Q filed on May 6, 2004.
######	Previously filed as an exhibit to the Form 10-Q filed on November 5, 2004.
~	Previously filed as an exhibit to the Form 8-K filed on October 22, 2004.
~~	Previously filed as an exhibit to the Form 8-K filed on May 23, 2005.
~~~	Previously filed as an exhibit to the Form 8-K filed on April 11, 2005.
~~~~	Previously filed as an exhibit to the Form 8-K filed on September 23, 2005.
~~~~~	Previously filed as an exhibit to the Form 8-K filed on October 3, 2005.

(c)	The following exhibits are filed as exhibits to this Form 10-K: See Item 15 (a) (3) above.
(d)	The following documents are filed as a part of this report:
	None.

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WELLSFORD REAL PROPERTIES, INC.

By:	/s/ James J. Burns
	James J. Burns Senior Vice President, Chief Financial Officer and Secretary
By:	/s/ Mark P. Cantaluppi
	Mark P. Cantaluppi Vice President, Chief Accounting Officer

Dated: March 13, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ Jeffrey H. Lynford Jeffrey H. Lynford	Chairman of the Board, Chief Executive Officer, President and Director	March 13, 2006
/s/ Bonnie R. Cohen Bonnie R. Cohen	Director	March 13, 2006
/s/ Douglas Crocker II Douglas Crocker II	Director	March 13, 2006
/s/ Meyer S. Frucher Meyer S. Frucher	Director	March 13, 2006
/s/ Mark S. Germain Mark S. Germain	Director	March 13, 2006
/s/ Edward Lowenthal Edward Lowenthal	Director	March 13, 2006

49

Exhibit 21.1

Subsidiaries of the Registrant

The following is a list of subsidiaries of the Registrant with the respective state of organization as of December 31, 2005:

Subsidiary	State
Wellsford Capital	Maryland
Wellsford Capital Properties, L.L.C	Delaware
Wellsford Finance, L.L.C	Delaware
Wellsford CRC Holding Corp.	Maryland
Clairborne Fordham Tower, LLC	Delaware
Creamer Vitale Wellsford L.L.C	Delaware
Wellsford Fordham Tower, L.L.C	Delaware
Wellsford Park Highlands Corp.	Colorado
Park at Highlands L.L.C	Colorado
Red Canyon at Palomino Park L.L.C	Colorado
Silver Mesa at Palomino Park L.L.C	Colorado
Green River at Palomino Park L.L.C	Colorado
Gold Peak at Palomino Park L.L.C	Colorado
Palomino Park Telecom L.L.C	Colorado
Parkside Cafe at Palomino Park, Inc.	Colorado
Palomino Park Owners Association	Colorado
Palomino Park Public Improvements Corp.	Colorado
Wellsford Commercial Properties Trust	Maryland
Wellsford/Whitehall Group, L.L.C	Delaware
Wellsford Ventures, Inc.	Maryland
Reis Capital Holding, L.L.C	Delaware
Wellsford Mantua LLC	Delaware
East Lyme Housing Ventures, LLC	Delaware
Claverack Housing Ventures, LLC	Delaware
Beekman Housing Ventures, LLC	Delaware
Orchards II Ventures LLC	Delaware
Beekman Holdings, Inc.	Delaware

50

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-80539) pertaining to the Wellsford Real Properties, Inc. Rollover Stock Plan, Wellsford Real Properties, Inc. 1997 Management Incentive Plan and the Wellsford Real Properties, Inc. 1998 Management Incentive Plan of Wellsford Real Properties, Inc. of our report dated March 13, 2006 with respect to the consolidated financial statements and schedule of Wellsford Real Properties, Inc. and Subsidiaries, Wellsford Real Properties, Inc. management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Wellsford Real Properties, Inc. and Subsidiaries included in the Annual Report (Form 10-K) for the year ended December 31, 2005.

/s/ ERNST & YOUNG LLP

Chicago, Illinois
March 13, 2006

51

Exhibit 23.2

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-80539) pertaining to the Wellsford Real Properties, Inc. Rollover Stock Plan, Wellsford Real Properties, Inc. 1997 Management Incentive Plan and the Wellsford Real Properties, Inc. 1998 Management Incentive Plan of Wellsford Real Properties, Inc. of our report dated January 31, 2006 with respect to the consolidated financial statements of Wellsford/Whitehall Group, L.L.C. and Subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, changes in members' equity, and cash flows for each of the three years in the period ended December 31, 2005, which report appears in the December 31, 2005 Annual Report (Form 10-K) of Wellsford Real Properties, Inc.

/s/ ERNST & YOUNG LLP

Dallas, Texas
March 13, 2006

52

Exhibit 23.3

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Wellsford Real Properties, Inc.:



We consent to the incorporation by reference in the registration statement on Form S-8 (No. 333-80539), of Wellsford Real Properties, Inc., of our report dated March 10, 2005, with respect to the consolidated balance sheets of Second Holding Company, LLC and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, members' equity and cash flows for each of the years in the three-year period ended December 31, 2004, which report is not separately presented.

/s/ KPMG LLP

Chicago, Illinois
March 13, 2006

53

Exhibit 31.1

CERTIFICATION PURSUANT TO
17 CFR 240.13a-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey H. Lynford, Chief Executive Officer of Wellsford Real Properties, Inc., certify that:

1. I have reviewed this report on Form 10-K of Wellsford Real Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:      March 13, 2006
By:	/s/ Jeffrey H. Lynford
	Jeffrey H. Lynford Chief Executive Officer

54

Exhibit 31.2

CERTIFICATION PURSUANT TO
17 CFR 240.13a-14(a),
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James J. Burns, Chief Financial Officer of Wellsford Real Properties, Inc., certify that:

1. I have reviewed this report on Form 10-K of Wellsford Real Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:      March 13, 2006
By:	/s/ James J. Burns
	James J. Burns Chief Financial Officer

55

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Wellsford Real Properties, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Jeffrey H. Lynford, Chief Executive Officer of the Company and James J. Burns, Chief Financial Officer of the Company, certify, to the best of our knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey H. Lynford

Jeffrey H. Lynford
Chief Executive Officer
Wellsford Real Properties, Inc.

/s/ James J. Burns

James J. Burns
Chief Financial Officer
Wellsford Real Properties, Inc.

March 16, 2006

A signed original of this written statement required by Section 906 has been provided to Wellsford Real Properties, Inc. and will be retained by Wellsford Real Properties, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

56

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page No. in Form 10-K
Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Statement of Net Assets in Liquidation (liquidation basis) at December 31, 2005	F-4
Consolidated Statement of Changes in Net Assets in Liquidation (liquidation basis) for the
Period November 18, 2005 to December 31, 2005	F-5
Consolidated Balance Sheet (going concern basis) at December 31, 2004	F-6
Consolidated Statements of Operations (going concern basis) for the Period January 1, 2005 to
November 17, 2005 and for the Years Ended December 31, 2004 and 2003	F-7
Consolidated Statements of Changes in Shareholders' Equity (going concern basis) for the Period
January 1, 2005 to November 17, 2005 and for the Years Ended December 31, 2004
and 2003	F-8
Consolidated Statements of Cash Flows for the Period November 18, 2005 to December 31, 2005
(liquidation basis), for the Period January 1, 2005 to November 17, 2005 and for the
Years Ended December 31, 2004 and 2003 (going concern basis)	F-9
Notes to Consolidated Financial Statements	F-11
Wellsford/Whitehall Group, L.L.C. Consolidated Financial Statements and Notes	F-47
FINANCIAL STATEMENT SCHEDULES
III.          Real Estate and Accumulated Depreciation	S-1

All other schedules have been omitted because the required information for such other schedules is not present, is not present in amounts sufficient to require submission of the schedule or because the required information is included in the consolidated financial statements.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Wellsford Real Properties, Inc.

We have audited the accompanying consolidated statement of net assets in liquidation (liquidation basis) of Wellsford Real Properties, Inc. and subsidiaries (the "Company") as of December 31, 2005, and the related consolidated statements of changes in net assets in liquidation (liquidation basis) and cash flows (liquidation basis) for the period from November 18, 2005 to December 31, 2005. We have also audited the consolidated balance sheet of the Company as of December 31, 2004 and the consolidated statements of operations, changes in shareholders' equity and cash flows for the period from January 1, 2005 to November 17, 2005 and each of the two years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the Index. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. The financial statements of Second Holding Company, LLC (a joint venture in which the Company had a 51.09% interest until such interest was sold on November 30, 2004), have been audited by other auditors whose report has been furnished to us; insofar as our opinion on the consolidated financial statements relates to the amounts included for Second Holding Company, LLC, it is based solely on their report. In the consolidated financial statements, the Company's equity in net (loss) income of Second Holding Company, LLC is stated at $(4,790,262) and $1,639,879, respectively, for the two years in the period ended December 31, 2004.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

As described in Note 1 to the consolidated financial statements, the shareholders of the Company approved a plan of liquidation on November 17, 2005 and the Company commenced liquidation shortly thereafter. As a result, the Company has changed its basis of accounting for periods subsequent to November 17, 2005 from the going-concern basis to a liquidation basis.

In our opinion, based on our audits and the 2004 and 2003 report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated net assets in liquidation (liquidation basis) of the Company and subsidiaries at December 31, 2005 and the related changes in consolidated net assets in liquidation (liquidation basis) and cash flows (liquidation basis) for the period from November 18, 2005 to December 31, 2005 and the consolidated financial position of the Company at December 31, 2004, and the consolidated results of its operations and its cash flows for the period from January 1, 2005 through November 17, 2005 and each of the two years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2006 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Chicago, Illinois
March 13, 2006

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Shareholders of Wellsford Real Properties, Inc.

We have audited management's assessment, included in the accompanying Management Report on Internal Control Over Financial Reporting in Item 9A, Controls and Procedures, of Form 10-K, that Wellsford Real Properties, Inc. and subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Wellsford Real Properties Inc. and subsidiaries' management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that Wellsford Real Properties, Inc. and subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Wellsford Real Properties, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the statement of consolidated net assets in liquidation (liquidation basis) of Wellsford Real Properties, Inc. and subsidiaries as of December 31, 2005 and the related consolidated statement of changes in net assets in liquidation (liquidation basis) and cash flows (liquidation basis) for the period from November 18, 2005 to December 31, 2005 and the consolidated balance sheet of the Company as of December 31, 2004 and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for the period from January 1, 2005 to December 17, 2005 and each of the two years in the period ended December 31, 2004, and our report dated March 13, 2006 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Chicago, Illinois
March 13, 2006

F-3

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION (LIQUIDATION BASIS)
DECEMBER 31, 2005

ASSETS
Real estate assets under development	$	44,233,031
Investments in joint ventures		20,453,074
Total real estate and investments		64,686,105
Cash and cash equivalents		41,027,086
Restricted cash and investments		18,953,325
Receivables, prepaid and other assets		2,003,635
Total assets		126,670,151
LIABILITIES AND NET ASSETS IN LIQUIDATION
Liabilities:
Mortgage notes and construction loans payable		19,250,344
Construction payables		3,878,872
Accrued expenses and other liabilities		6,977,182
Reserve for estimated costs during the liquidation period		24,057,079
Deferred compensation liability		14,720,730
Total liabilities		68,884,207
Minority interests at estimated value		1,216,530
Total liabilities and minority interests		70,100,737
Commitments and contingencies
Net assets in liquidation	$	56,569,414

See notes to Consolidated Financial Statements

F-4

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS)
FOR THE PERIOD NOVEMBER 18, 2005 TO DECEMBER 31, 2005

Shareholders' equity - November 17, 2005 (going concern basis)	$	101,817,561
Adjustments relating to adoption of liquidation basis of accounting:
Adjustment of real estate investments and other assets to
net realizable value, net of liability for income taxes		72,485,014
Accrual of estimated costs of liquidation and termination		(24,767,375	)
Adjustment of carrying amounts of minority interests		(2,646,198	)
Net assets in liquidation - November 18, 2005		146,889,002
Changes in net assets in liquidation - November 18, 2005 to      December 31, 2005:
Operating income		220,942
Exercise of stock options		56,074
Distributions to stockholders		(90,596,604	)
Changes in net assets in liquidation - November 18, 2005 to      December 31, 2005		(90,319,588	)
Net assets in liquidation - December 31, 2005	$	56,569,414

See notes to Consolidated Financial Statements

F-5

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (GOING CONCERN BASIS)
DECEMBER 31, 2004

ASSETS
Real estate assets, at cost:
Land	$	18,735,969
Buildings and improvements		113,575,359
		132,311,328
Less:
Accumulated depreciation		(21,030,744	)
		111,280,584
Residential units available for sale		353,702
Construction in process		18,609,685
		130,243,971
Notes receivable		1,189,500
Investments in joint ventures		13,984,968
Total real estate and investments		145,418,439
Cash and cash equivalents		65,863,790
Restricted cash and investments		13,534,175
Investments in U.S. Government securities		27,551,254
Prepaid and other assets		2,269,652
Total assets	$	254,637,310
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes and construction loans payable	$	108,852,625
Junior subordinated debentures ("Debentures")		25,775,000
Accrued expenses and other liabilities		6,646,117
Deferred compensation liability		10,156,667
Total liabilities		151,430,409
Minority interests		4,423,632
Total liabilities and minority interests		155,854,041
Commitments and contingencies
Shareholders' equity:
Series A 8% convertible redeemable preferred stock, $.01 par value
per share, 2,000,000 shares authorized, no shares issued and outstanding		--
Common stock, 98,825,000 shares authorized, $.02 par value per share,
6,296,620 shares issued and outstanding		125,933
Class A-1 common stock, 175,000 shares authorized, $.02 par value per
share, 169,903 shares issued and outstanding		3,398
Paid in capital in excess of par value		162,848,758
Retained earnings (deficit)		(57,945,686	)
Treasury stock, 302,062 shares		(6,249,134	)
Total shareholders' equity		98,783,269
Total liabilities and shareholders' equity	$	254,637,310

See notes to Consolidated Financial Statements

F-6

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (GOING CONCERN BASIS)
FOR THE PERIOD JANUARY 1, 2005 TO NOVEMBER 17, 2005 AND FOR THE YEARS ENDED
DECEMBER 31, 2004 AND 2003

	For the Period January 1 to		For the Years Ended December 31,
	November 17, 2005		2004			2003
REVENUES
Rental revenue	$	12,153,235	$	13,366,695		$	14,256,344
Revenue from sales of residential units		488,075		12,288,483			12,535,481
Interest revenue		1,551,165		1,197,531			7,451,199
Fee revenue		518,000		796,617			1,359,408
Total revenues		14,710,475		27,649,326			35,602,432
COSTS AND EXPENSES
Cost of sales of residential units		385,631		10,130,861			10,708,448
Property operating and maintenance		4,806,411		4,786,558			4,894,726
Real estate taxes		842,811		1,191,282			1,296,883
Depreciation and amortization		3,886,889		4,636,684			8,537,016
Property management		331,261		316,479			292,102
Interest:
Mortgage notes payable		4,658,626		6,148,762			6,583,411
Debentures		823,643		2,099,815			--
General and administrative		7,887,820		8,270,768			5,590,971
Total costs and expenses		23,623,092		37,581,209			37,903,557
Income (loss) from joint ventures		11,849,733		(23,715,114	)		(34,429,066	)
Income (loss) before minority interest, income taxes,
accrued distributions and amortization of costs on
Convertible Trust Preferred Securities and
discontinued operations		2,937,116		(33,646,997	)		(36,730,191	)
Minority interest benefit		172,176		88,478			85,337
Income (loss) before income taxes, accrued distributions
and amortization of costs on Convertible Trust
Preferred Securities and discontinued operations		3,109,292		(33,558,519	)		(36,644,854	)
Income tax expense (benefit)		91,000		(130,000	)		7,135,000
Income (loss) before accrued distributions and
amortization of costs on Convertible Trust Preferred
Securities and discontinued operations		3,018,292		(33,428,519	)		(43,779,854	)
Accrued distributions and amortization of costs on
Convertible Trust Preferred Securities		--		--			2,099,815
Income (loss) from continuing operations		3,018,292		(33,428,519	)		(45,879,669	)
Income from discontinued operations, net of income tax
expense of $80,000 and $16,000 in 2004 and 2003,
respectively		--		725,069			20,348
Net income (loss)	$	3,018,292	$	(32,703,450	)	$	(45,859,321	)
Per share amounts, basic and diluted:
Income (loss) from continuing operations	$	0.47	$	(5.17	)	$	(7.11	)
Income (loss) from discontinued operations		--		0.11			--
Net income (loss)	$	0.47	$	(5.06	)	$	(7.11	)
Weighted average number of common shares outstanding:
Basic		6,467,639		6,460,129			6,454,236
Diluted		6,470,482		6,460,129			6,454,236

See notes to Consolidated Financial Statements

F-7

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (GOING CONCERN BASIS)
FOR THE PERIOD JANUARY 1, 2005 TO NOVEMBER 17, 2005 AND
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

	Common Shares*				Paid in		Retained Earnings			Accumulated Other Comprehensive			Deferred			Total Shareholders'			Comprehensive
	Shares		Amount		Capital**		(Deficit)			(Loss) Income			Compensation			Equity			(Loss) Income
Balance, January 1, 2003		6,450,586	$	129,012	$	156,352,364	$	20,617,085		$	(253,500	)	$	(277,664	)	$	176,567,297
Director share grants		5,408		108		85,225		--			--			--			85,333		$	--
Amortization of deferred
compensation		--		--		--		--			--			277,664			277,664			--
Share of unrealized income on
interest rate protection contract
purchased by joint venture
investment, net of income tax
benefit of $135,381		--		--		--		--			203,071			--			203,071			203,071
Net (loss)		--		--		--		(45,859,321	)		--			--			(45,859,321	)		(45,859,321	)
Balance, December 31, 2003		6,455,994		129,120		156,437,589		(25,242,236	)		(50,429	)		--			131,274,044		$	(45,656,250	)
Director share grants		3,836		77		63,923		--			--			--			64,000		$	--
Stock option exercises		6,693		134		98,112		--			--			--			98,246			--
Share of unrealized income on
interest rate protection contract		--		--		--		--			50,429			--			50,429			50,429
Net (loss)		--		--		--		(32,703,450	)		--			--			(32,703,450	)		(32,703,450	)
Balance, December 31, 2004		6,466,523		129,331		156,599,624		(57,945,686	)		--			--			98,783,269		$	(32,653,021	)
Director share grants		1,116		22		15,978		--			--			--			16,000		$	--
Net income for the period January
1 to November 17, 2005		--		--		--		3,018,292			--			--			3,018,292			3,018,292
Balance, November 17, 2005		6,467,639	$	129,353	$	156,615,602	$	(54,927,394	)	$	--		$	--		$	101,817,561		$	3,018,292

*	Includes 169,903 class A-1 common shares.
**	Net of shares held in the deferred compensation trust and treated as treasury stock.

See notes to Consolidated Financial Statements

F-8

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	2005						Going Concern Basis
	Liquidation Basis			Going Concern Basis			For the Years Ended December 31,
	November 18 to December 31			January 1 to November 17			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Change in net assets in liquidation from operating activities	$	220,942		$	--		$	--		$	--
Net income (loss) (period prior to liquidation accounting)		--			3,018,292			(32,703,450	)		(45,859,321	)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Gain on redemption of joint venture interest		--			(5,986,396	)		--			--
Impairment charges and transaction losses from
investments in joint ventures		--			--			24,427,684			37,376,500
Gain on sale of assets and release of contingent liability		--			--			(808,856	)		--
Deferred tax (credit) provision		--			(61,000	)		(300,000	)		6,842,000
Depreciation and amortization		11,846			4,160,532			4,673,999			8,685,996
Amortization of deferred compensation		--			--			--			277,664
Net amortization of premiums/discounts on U.S.
Government securities		356			898			23,047			--
Undistributed joint venture income		--			--			--			(1,282,797	)
Undistributed minority interest (benefit)		(11,257	)		(172,176	)		(88,478	)		(85,337	)
Stock issued for director compensation		--			16,000			64,000			85,333
Value of option grants for director compensation		--			--			71,500			93,600
Changes in assets and liabilities:
Restricted cash and investments		(3,830,272	)		(688,878	)		(3,323,770	)		(666,471	)
Residential units available for sale		--			353,702			8,882,268			9,342,643
Assets held for sale		--			--			449,057			(356,001	)
Construction in process		(4,021,343	)		(22,900,464	)		(10,660,002	)		(360,551	)
Prepaid and other assets		347,116			(328,450	)		500,852			2,126,663
Accrued expenses and other liabilities		(215,741	)		1,339,441			(547,718	)		62,157
Reserve for estimated costs during the liquidation period		(710,296	)		--			--			--
Construction payables		794,525			3,084,347			--			--
Deferred compensation liability		2,995,746			1,568,317			408,180			814,880
Liabilities attributable to assets held for sale		--			--			(317,486	)		93,479
Net cash (used in) provided by operating activities		(4,418,378	)		(16,595,835	)		(9,249,173	)		17,190,437
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of U.S. Government securities		--			--			(2,608,090	)		(27,516,211	)
Redemption of U.S. Government securities		2,550,000			25,000,000			2,550,000			--
Investments in real estate assets		--			(23,944	)		(18,407	)		(19,558	)
Return of capital and proceeds from sales and redemptions
of investments in joint ventures		--			12,792,662			15,934,134			509,963
Repayments of notes receivable		--			1,032,000			2,064,000			25,516,000
Proceeds from the sale of real estate assets		166,912,078			--			2,694,334			4,165,467
Purchase of minority interest		--			(2,087,000	)		--			--
Net cash provided by investing activities		169,462,078			36,713,718			20,615,971			2,655,661
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from mortgage notes payable and construction
loans		2,817,622			16,071,903			360,820			40,000,000
Deferred financing costs		--			--			--			(316,881	)
Repayments of mortgage notes payable		(94,429,482	)		(14,062,324	)		(1,496,584	)		(42,728,268	)
Redemption of Debentures		--			(25,775,000	)		--			--
Proceeds from option exercises		56,074			--			98,246			--
Minority interest investment		--			--			157,500			--
Distributions to minority interest		(3,408,351	)		(672,125	)		(505	)		(5,275	)
Distributions to shareholders		(90,596,604	)		--			--			--
Net cash (used in) financing activities		(185,560,741	)		(24,437,546	)		(880,523	)		(3,050,424	)
Net (decrease) increase in cash and cash equivalents		(20,517,041	)		(4,319,663	)		10,486,275			16,795,674
Cash and cash equivalents, beginning of period		61,544,127			65,863,790			55,377,515			38,581,841
Cash and cash equivalents, end of period	$	41,027,086		$	61,544,127		$	65,863,790		$	55,377,515

F-9

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)

	2005				Going Concern Basis
	Liquidation Basis		Going Concern Basis		For the Years Ended December 31,
	November 18 to December 31		January 1 to November 17		2004		2003
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest including interest
on Debentures of $979,688 and $2,063,000 in the period
January 1 to November 17, 2005 and for the year ended
December 31, 2004, respectively, and excluding interest
funded by construction loans	$	5,016,192	$	6,153,093	$	8,613,174	$	6,556,762
Cash paid during the period for income taxes, net of tax
refunds (refunds in excess of income taxes paid)	$	671,714	$	54,461	$	440,968	$	(1,795,490	)
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Other comprehensive income (loss); share of unrealized
income (loss) on interest rate protection contract
purchased by joint venture investment, net of tax					$	50,429	$	203,071
Release of shares held in deferred compensation plan	$	633,000	$	100,000	$	50,000	$	100,000
The effect of deconsolidating $25,000,000 of Convertible
Trust Preferred Securities and recording $25,775,000 of
junior subordinated debentures and related joint venture
investment					$	775,000
Reclassification of Silver Mesa units from land, building
and improvements and accumulated depreciation to
residential units available for sale in 2003							$	4,036,979
Value of land, net other assets and minority interest
assumed on consolidated investment							$	100,100
Note issued for minority interest investment					$	157,500
Assets and liabilities arising upon formation of joint
venture:
Construction in process, including land of $2,000,000					$	2,121,230
Mortgage assumed					$	483,827
Accrued expenses and other liabilities assumed					$	887,403
Minority interest contributed					$	750,000

See notes to Consolidated Financial Statements

F-10

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.

Organization, Business and Plan of Liquidation

Organization and Business Wellsford Real Properties, Inc. (and subsidiaries, collectively, the "Company") was formed as a Maryland corporation on January 8, 1997, as a corporate subsidiary of Wellsford Residential Property Trust (the "Trust"). On May 30, 1997, the Trust merged (the "Merger") with Equity Residential ("EQR"). Immediately prior to the Merger, the Trust contributed certain of its assets to the Company and the Company assumed certain liabilities of the Trust. Immediately after the contribution of assets to the Company and immediately prior to the Merger, the Trust distributed to its common stockholders all of the outstanding shares of the Company owned by the Trust. The Company was formed to operate as a real estate merchant banking firm to acquire, develop, finance and operate real properties and invest in private and public real estate companies. At December 31, 2005, the Company's remaining primary operating activities are the development, construction and sale of three residential projects. Previously, the Company's activities had been categorized into three strategic business units ("SBUs") within which it executed its business plans: (i) Commercial Property Activities; (ii) Debt and Equity Activities; and (iii) Residential Activities. During September 2005, the Company ceased its Commercial Property Activities when its equity interest in Wellsford/Whitehall Group, L.L.C. ("Wellsford/Whitehall") was redeemed. See Footnote 11 for additional information regarding the Company's segments. Plan of Liquidation On May 19, 2005, the Company's Board of Directors (the "Board") approved the Plan of Liquidation (the "Plan") and on November 17, 2005, the Company's stockholders adopted the Plan. The Plan contemplates the orderly sale of each of the Company's remaining assets, which are either owned directly or through the Company's joint ventures, the collection of all outstanding loans from third parties, the orderly disposition or completion of construction of development properties, the discharge of all outstanding liabilities to third parties and, after the establishment of appropriate reserves, the distribution of all remaining cash to stockholders. The Company currently contemplates that approximately 36 months after the approval of the Plan any remaining assets and liabilities would be transferred into a liquidating trust. The liquidating trust would continue in existence until all liabilities have been settled, all remaining assets have been sold and proceeds distributed and the appropriate statutory periods have lapsed. After the approval of the Plan by the stockholders, the Company completed the sale of its largest asset, the three residential rental phases of its Palomino Park project for $176,000,000. On December 14, 2005, the Company made the initial liquidating distribution of $14.00 per share, aggregating approximately $90,597,000, to its stockholders. For all periods preceding stockholder approval of the Plan on November 17, 2005, the Company's financial statements are presented on the going concern basis of accounting. As required by generally accepted accounting principles, the Company adopted the liquidation basis of accounting as of the close of business on November 17, 2005. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted as appropriate.

F-11

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Organization, Business and Plan of Liquidation (continued)

The following paragraphs summarize certain of the material actions and events which have occurred regarding the Plan and certain decisions of the Board.

In March 2004, the Company reported that the Board authorized and retained the financial advisory firm, Lazard Ltd, to advise the Company on various strategic financial and business alternatives available to it to maximize stockholder value. Such alternatives included a recapitalization, acquisitions, disposition of assets, liquidation, the sale or merger of the Company and other alternatives that would keep the Company independent. On May 19, 2005, after consideration of the alternatives available, the Company announced that its Board approved the Plan.

In March 2005, the Board authorized the marketing of the three residential rental phases of Palomino Park. In the second quarter of 2005, the Company engaged a broker to market these phases. In August 2005, the Company entered into an agreement to sell these phases for $176,000,000, subject to, among other things, stockholder approval of the Plan. The sale closed on November 22, 2005.

The following transactions, which are consistent with the intent of the Plan, occurred prior to the November 17, 2005 adoption of the Plan by the stockholders: (i) in September 2005, the Company's interest in its Wellsford/Whitehall joint venture was redeemed for approximately $8,300,000, (ii) by May 2005, the Company retired $12,680,000 of tax exempt bond financing, (iii) in April 2005, the Company redeemed its outstanding $25,775,000 of Debentures and (iv) in November 2004, the Company received $15,000,000 for its interest in a joint venture which purchased debt instruments ("Second Holding").

The initial liquidating distribution of $14.00 per share was made on December 14, 2005 to stockholders of record at December 2, 2005.

At December 31, 2005, the Company reported in the accompanying financial statements that its net assets in liquidation aggregated $56,569,000, or $8.74 per share based upon 6,471,179 common shares outstanding at December 31, 2005. This amount presents development projects at estimated net realizable value after giving effect to the discounting of estimated net proceeds therefrom. All other assets are presented at estimated net realizable value on an undiscounted basis. The amount also includes a reserve for future estimated general and administrative expenses and other costs during the liquidation. Estimated net realizable value reflects economic changes and various other changed circumstances over recent months. There can be no assurance that these estimated values will be realized. Such amount should not be taken as an indication of the timing or amount of future distributions to be made by the Company (see the Liquidation Basis of Accounting disclosure below).

The timing and amount of interim liquidating distributions (if any) and final liquidating distributions will depend on the timing and amount of proceeds the Company will receive upon the sale of the remaining assets and the extent to which reserves for current or future liabilities are required. Accordingly, there can be no assurance that there will be any liquidating distributions prior to a final liquidating distribution.

F-12

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

2. Summary of Significant Accounting Policies

Basis of Presentation

Liquidation Basis of Accounting

With the approval of the Plan by the stockholders, the Company adopted the liquidation basis of accounting effective as of the close of business on November 17, 2005. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted as appropriate. A Statement of Net Assets in Liquidation and a Statement of Changes in Net Assets in Liquidation are the principal financial statements presented under the liquidation basis of accounting. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amounts represent estimates, based on present facts and circumstances, of the net realizable values of assets and the costs associated with carrying out the Plan and dissolution based on the assumptions set forth below. The actual values and costs associated with carrying out the Plan are expected to differ from the amounts shown herein because of the inherent uncertainty and will be greater than or less than the amounts recorded. Such differences may be material. In particular, the estimates of the Company's costs will vary with the length of time it operates. In addition, the estimate of net assets in liquidation per share in the accompanying Statement of Net Assets in Liquidation, which except for projects under development, does not incorporate a present value discount. Accordingly, it is not possible to predict the aggregate amount or timing of future distributions to stockholders and no assurance can be given that the amount of liquidating distributions to be received will equal or exceed the estimate of net assets in liquidation per share presented in the accompanying Statement of Net Assets in Liquidation or the price or prices at which the Company's common stock has traded or is expected to trade in the future.

Valuation Assumptions

Under the liquidation basis of accounting, the carrying amounts of assets as of the date of the adoption of the Plan (November 17, 2005) were adjusted to their estimated net realizable values and liabilities including the estimated costs associated with implementing the Plan were adjusted to estimated settlement amounts. The following are the significant assumptions utilized by management in assessing the value of assets and the expected settlement values of liabilities included in the Statement of Net Assets in Liquidation at November 18, 2005 and December 31, 2005.

Net Assets in Liquidation

Real estate assets under development are primarily reflected at net realizable value which is based upon the Company's budgets for constructing and selling out the respective project in the orderly course of business. Sales prices are based upon contracts signed to date and budgeted sales prices for the unsold units or homes. Sales prices have been determined in consultation with the respective third party company who is the sales agent for the project, where applicable. Costs and expenses are based upon the Company's budgets which have been reviewed with the third party construction company or joint venture partner. In certain cases, construction costs are subject to binding contracts. The Company has assumed that existing construction financing will remain in place during the respective projects' planned construction and sell out. Anticipated future cost increases for construction are assumed to be funded by the existing construction lenders and the Company at the present structured debt to equity capitalization ratios in which event the Company will make additional equity contributions. For one project, the Company has assumed that a construction loan will be obtained at currently existing LIBOR spreads and customary industry debt to equity capitalization levels. The expected net sales proceeds have been discounted on a quarterly basis at 17.5% to 26% annual rates to determine the estimated net realizable value of the Company's equity investment.

F-13

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Summary of Significant Accounting Policies (continued)

A land parcel acquired in November 2005 (the "East Lyme Land") is stated at cost which is the current estimated net realizable value.

The Reis, Inc. ("Reis") valuation amount is based upon offers Reis is currently considering from potential purchasers as of March 13, 2006. See Footnote 11 for additional disclosure regarding the risks and uncertainties regarding Reis and the possible sale of that company.

Assets of the deferred compensation plan are included in restricted cash and investments and primarily stated at their respective market values and are equal to the related deferred compensation liability.

The Beekman assets (collectively, "Beekman") are presented at the Company's aggregate cost which equals its net realizable value. On January 27, 2006, a company which is owned by Messrs. Lynford and Lowenthal, the principal of the Company's joint venture partner in the East Lyme project and others, acquired the Beekman project for an amount equal to costs and expenses incurred by the Company.

Cash, deposits and escrow accounts are presented at face value. The Company's remaining assets, that the Company has determined to have a cash value, are stated at estimated net realizable value which is the expected selling price or contractual payment to be received, less applicable direct costs or expenses, if any. The assets that have been valued on this basis include receivables, joint venture investments and other investments. All assets, other than as described above, were assigned no value at November 18, 2005 and December 31, 2005.

Mortgage notes and construction loans payable, construction payables and accrued expenses and other liabilities are stated at settlement amounts.

Reserve for Estimated Costs During the Liquidation Period

Under the liquidation basis of accounting, the Company is required to estimate and accrue the costs associated with implementing and completing the Plan. These amounts can vary significantly due to, among other things, the timing and realized proceeds from sales of the projects under development and the sale of Reis to a third party, the costs of retaining personnel and others to oversee the liquidation, including the cost of insurance, the timing and amounts associated with discharging known and contingent liabilities and the costs associated with cessation of the Company's operations including an estimate of costs subsequent to that date (which would include reserve contingencies for the appropriate statutory periods). As a result, the Company has accrued the projected costs, including corporate overhead and specific liquidation costs of severance and retention bonuses, professional fees, and other miscellaneous wind-down costs, expected to be incurred during the projected period required to complete the liquidation of the Company's remaining assets. Also, the Company has not recorded any liability for any cash operating shortfall that may result at the projects under construction during the anticipated holding period because management currently expects that projected operating shortfalls could be funded from the operating profits overall from the sale of homes and condominium units and interest earned on invested cash. These projections could change materially based on the timing of any such anticipated sales, the performance of the underlying assets and changes in the underlying assumptions of the cash flow amounts projected. These accruals will be adjusted from time to time as projections and assumptions change.

F-14

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Summary of Significant Accounting Policies (continued)

The following is a summary of the changes in the Reserve for Estimated Costs During the Liquidation Period:

	November 18, 2005		Transfers and Payments		December 31, 2005
Payroll, benefits, severance and
retention costs	$	12,368,000	$	405,000	$	11,963,000
Professional fees		4,837,000		122,000		4,715,000
Other general and administrative costs		7,562,000		183,000		7,379,000
Total	$	24,767,000	$	710,000	$	24,057,000

Going Concern Basis of Accounting

For all periods preceding the approval of the Plan on November 17, 2005, the Company's financial statements are presented on the going concern basis of accounting. Such financial statements reflect the historical basis of the assets and liabilities as of December 31, 2004 and the historical results of operations related to the Company's assets and liabilities for the period from January 1, 2005 to November 17, 2005 and the years ended December 31, 2004 and 2003, as well as all preceding years.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries and include the assets and liabilities contributed to and assumed by the Company from the Trust, from the time such assets and liabilities were acquired or incurred, respectively, by the Trust. Investments in entities where the Company does not have a controlling interest were accounted for under the equity method of accounting. These investments were initially recorded at cost and are subsequently adjusted for the Company's proportionate share of the investment's income (loss) and additional contributions or distributions through the adoption of the liquidation basis of accounting. Investments in entities where the Company does not have the ability to exercise significant influence are accounted for under the cost method. All significant inter-company accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.

Variable Interests

During 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46R "Consolidation of Variable Interest Entities" ("FIN46R"). The Company evaluates its investments and subsidiaries to determine if an entity is a voting interest entity or a variable interest entity ("VIE") under the provisions of FIN46R. An entity is a VIE when (i) the equity investment at risk is not sufficient to permit the entity from financing its activities without additional subordinated financial support from other parties or (ii) equity holders either (a) lack direct or indirect ability to make decisions about the entity, (b) are not obligated to absorb expected losses of the entity or (c) do not have the right to receive expected residual returns of the entity if they occur. If an entity or investment is deemed to be a VIE, an enterprise that absorbs a majority of the expected losses of the VIE or receives a majority of the residual returns is considered the primary beneficiary and must consolidate the VIE. The following table and footnotes identify the Company's VIEs:

F-15

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Summary of Significant Accounting Policies (continued)

	VIE at December 31,		Requires
Entity (a)	2005	2004	Consolidation
WRP Convertible Trust I	N/A	Yes	No	(b)
Non-qualified deferred compensation trust	Yes	Yes	Yes	(c)
Reis	Yes	Yes	No	(d)
Second Holding	N/A	(e)	No	(f)
Wellsford Mantua, LLC	Yes	Yes	Yes	(g)
Claverack Housing Ventures, LLC	Yes	Yes	Yes	(h)
Beekman	Yes	Yes	No	(i)

(a)

For additional information regarding these entities, see Footnote 11.

(b)

The entity that issued the Convertible Trust Preferred Securities is a VIE, however, it is not appropriate to consolidate this entity under the provisions of FIN46R as equity interests are variable interests only to the extent that the investment is considered to be at risk. Since the Company's investment was funded by WRP Convertible Trust I, it is not considered to be at risk. Accordingly, the Company de-consolidated the entity during the first quarter of 2004. The entity ceased operations when the Convertible Trust Preferred Securities were redeemed in April 2005.

(c)	The non-qualified deferred compensation trust ("Rabbi Trust" or "Deferred Compensation Plan") is a VIE as it does not have its own equity. The Company is the primary beneficiary of the Rabbi Trust as the assets would be subject to attachment in a bankruptcy. The Company consolidated the assets and liabilities of the Rabbi Trust at December 31, 2005 and 2004, as well as for periods prior to the issuance of FIN46R as appropriate under other existing accounting literature.
(d)	Reis is a VIE because as of the last capital event for that entity in 2002 (the triggering event for VIE evaluation purposes), it was determined that Reis did not have sufficient capital to support its business activities at that time. Consolidation of Reis is not required by the Company as it would not be the primary beneficiary.
(e)	The Company sold its investment in Second Holding in November 2004.
(f)	Second Holding was a VIE at December 31, 2003, however, the Company was not the primary beneficiary because it would not expect that it would absorb a majority of Second Holding's probability-weighted expected losses, nor would it ever receive a majority of the residual returns. Therefore, consolidation was not required under FIN46R nor was consolidation appropriate under then existing accounting literature. The Company used the equity method of accounting to account for this investment.
(g)	Wellsford Mantua, LLC ("Wellsford Mantua") is a VIE as the venture does not have sufficient equity to support its operations as the Company provides 100% of the financing to this entity and the owners have deminimus equity in the entity. The Company is the primary beneficiary and consolidates this entity.

(h)

Claverack Housing Ventures, LLC ("Claverack"), an entity in which the Company owns a 75% interest in equity and profits (except if returns exceed 35% per annum as defined) is considered a VIE, since the original capital is insufficient to support its contemplated activities. Claverack is consolidated, even though the two members share business decisions equally, since the Company would be the primary beneficiary of profits or absorber of losses. At December 31, 2005, Claverack had $62,000 of restricted cash and was subject to $449,000 of construction debt which was jointly guaranteed by the Company and the principal of its joint venture partner.

(i)

Beekman is a VIE, however, since the Company's investment was a mortgage interest, the Company has no GAAP equity in the entity and would not be the primary bearer of losses, consolidation is not appropriate.

Cash and Cash Equivalents. The Company considers all demand and money market accounts and short term investments in government funds with a maturity of three months or less at the date of purchase to be cash and cash equivalents.

Investment in U.S. Government Securities. Investments in U.S. Government securities were classified as held-to-maturity and carried at amortized cost.

Real Estate, Other Investments, Depreciation, Amortization and Impairment. Costs directly related to the acquisition, development and improvement of real estate are capitalized, including interest and other costs incurred during the construction period. Costs incurred for significant repairs and maintenance that extend the usable life of the asset or have a determinable useful life are capitalized.

F-16

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Summary of Significant Accounting Policies (continued)

Ordinary repairs and maintenance are expensed as incurred. The Company expensed all lease turnover costs for its residential units such as painting, cleaning, carpet replacement and other turnover costs as such costs were incurred.

Depreciation was computed over the expected useful lives of depreciable property on a straight-line basis, principally 27.5 years for residential buildings and improvements and two to twelve years for furnishings and equipment. Depreciation and amortization expense was approximately $3,887,000, $4,637,000 and $8,537,000 during the period January 1, 2005 to November 17, 2005 and for the years ended December 31, 2004 and 2003, respectively, and included approximately $238,000 and $4,021,000 of amortization during the years ended December 31, 2004 and 2003, respectively, of certain costs capitalized to the Company's Investments in Joint Ventures. No amortization was recorded in 2005 as such capitalized costs related to the Investments in Joint Ventures were fully amortized in 2004.

The Company has historically reviewed its real estate assets, investments in joint ventures and other investments for impairment (i) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable for assets held for use and (ii) when a determination is made to sell an asset or investment. Under the liquidation basis of accounting, the Company will evaluate the fair value of real estate assets owned and under construction and make adjustments to the carrying amounts when appropriate.

Deferred Financing Costs. Deferred financing costs consist of costs incurred to obtain financing or financing commitments. Such costs were amortized by the Company as a going concern over the expected term of the respective agreements or, if related to development assets, is included in the basis of the project to be expensed as homes/units are sold.

Revenue Recognition. Commercial properties were leased under operating leases. Rental revenue from office properties was recognized on a straight-line basis over the terms of the respective leases. Residential units were leased under operating leases with typical terms of six to fourteen months and such rental revenue was recognized monthly as tenants were billed. Interest revenue is recorded on an accrual basis. Fee revenues were recorded in the period earned, based upon formulas as defined by agreement for management services or upon asset sales and purchases by certain joint venture investments. Sales of real estate assets, including condominium units and single family homes, and investments are recognized at closing subject to receipt of down payments and other requirements in accordance with applicable accounting guidelines.

Share Based Compensation. SFAS No. 123 "Accounting for Stock-Based Compensation" establishes a fair value based method of accounting for share based compensation plans, including share options. Registrants may have elected to continue accounting for share option plans under Accounting Principles Board Opinion ("APB") No. 25, but were required to provide pro forma net income and earnings per share information "as if" the fair value approach had been adopted. The Company previously elected to account for its share based compensation plans under APB No. 25, resulting in no impact on the Company's consolidated financial statements through December 31, 2002.

In December 2002, SFAS No. 148 "Accounting for Stock-Based Compensation-Transition and Disclosure" was issued as an amendment to SFAS No. 123. The Company has used the prospective method of transition to account for stock-based compensation on a fair value basis during 2004 and 2003. This method resulted in the Company applying the provisions of SFAS No. 123 to all 2004 and 2003 grants and, if applicable, to significant modifications to the terms of previously granted options, by expensing the determined fair value of the options over the future vesting periods.

F-17

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Summary of Significant Accounting Policies (continued)

In December 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), "Share-Based Payment," which is a revision of SFAS No. 123 ("SFAS No. 123R"). SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company does not anticipate that adoption of SFAS No. 123R on January 1, 2006 will have a material impact to reported Net Assets in Liquidation as it has previously adopted the prospective method of transition under SFAS No. 148 and all options outstanding have fully vested by December 31, 2004.

The Company has a Rabbi Trust which was available to its employees and officers who could voluntarily contribute compensation awarded as either (a) shares of the Company's stock or (b) bonuses paid in cash. The Rabbi Trust does not permit diversification of Company stock contributed into it and all distributions to employees are to be made in kind to the employee/beneficiary for such Company stock contributions. The Company's stock held by the Rabbi Trust is classified in equity and recorded for accounting purposes in a manner equivalent to treasury stock. Any changes in the fair value of the stock is not recognized in the consolidated financial statements. Contributions made in cash to the Rabbi Trust are classified as restricted cash and investments with a corresponding liability within the consolidated balance sheets of the Company.

Stock awarded as compensation by the Company was recorded at the market price on the date of issuance and amortized to expense over the respective vesting periods.

Income Taxes. The Company accounts for income taxes under SFAS No. 109 "Accounting for Income Taxes." Deferred income tax assets and liabilities are determined based upon differences between financial reporting, including the liquidation basis of accounting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that are estimated to be in effect when the differences are expected to reverse. Valuation allowances with respect to deferred income tax assets are recorded when deemed appropriate and adjusted based upon periodic evaluations.

Per Share Data. Basic earnings per common share are computed based upon the weighted average number of common shares outstanding during the period, including class A-1 common shares and shares held in the Rabbi Trust. Diluted earnings per common share are based upon the increased number of common shares that would be outstanding assuming the exercise of dilutive common share options, if any.

F-18

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Summary of Significant Accounting Policies (continued)

The following table details the computation of earnings per share, basic and diluted:

	For the Period		For the Years Ended December 31,
	January 1 to November 17, 2005		2004			2003
Numerator:
Income (loss) from continuing operations	$	3,018,292	$	(33,428,519	)	$	(45,879,669	)
Income from discontinued operations, net of income tax
expense of $80,000 and $16,000 in 2004 and 2003,
respectively		--		725,069			20,348
Net income (loss)	$	3,018,292	$	(32,703,450	)	$	(45,859,321	)
Denominator:
Denominator for net income (loss) per common share,
basic - weighted average common shares		6,467,639		6,460,129			6,454,236
Effect of dilutive securities:
Stock options		2,843		--			--
Denominator for net income (loss) per common share,
diluted - weighted average common shares		6,470,482		6,460,129			6,454,236
Per share amounts, basic and diluted:
Income (loss) from continuing operations	$	0.47	$	(5.17	)	$	(7.11	)
Income from discontinued operations		--		0.11			--
Net income (loss)	$	0.47	$	(5.06	)	$	(7.11	)

Estimates. The preparation of financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Reclassification. Financial statement amounts have been reclassified to conform to the liquidation basis of accounting.

3. Restricted Cash and Investments

Restricted cash and investments primarily consists of (i) deferred compensation arrangement deposits in the Rabbi Trust, (ii) real estate tax reserve balances, (iii) deposits for development projects, (iv) escrow deposits and (v) cash in consolidated joint ventures which is restricted for such joint venture's use only.

At December 31, 2005 and 2004, deferred compensation arrangement deposits amounted to approximately $14,721,000 and $10,157,000, respectively. Deferred compensation arrangement deposits were primarily made by employees prior to 1997 and assumed from the Trust at the time of the Merger. Such deposits were made in cash, but could be used to purchase other investments including equity securities, bonds and partnership interests by the trustees of the Rabbi Trust. In December 2005, as a result of an amendment to the deferred compensation plan, four of the six participants in the Company's deferred compensation plan withdrew their entire amounts from the plan which aggregated approximately $993,000. On January 27, 2006, the subsidiary holding the balance of the deferred compensation assets and the related liabilities which are payable to the Company's Chairman and the former President of the Company was acquired by a company which is owned by these individuals and others.

F-19

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Restricted Cash and Investments (continued) Deposits related to residential development projects and cash restricted for use by joint ventures was $3,332,000 and $1,695,000, respectively, at December 31, 2005 and 2004. At December 31, 2005, $900,000 was held in escrow related to the Palomino Park sale as security for certain covenants made to the buyer. If no claims are asserted by the buyer, the escrow will be released in May 2006. Real estate tax reserve balance amounted to approximately $504,000 at December 31, 2004, with no such balance at December 31, 2005 as a result of the Palomino Park sale.

4.

Debt At December 31, 2005 and 2004, the Company's debt consisted of the following:

	Initial	Stated			Balance at December 31,
Debt/Project	Maturity Date	Interest Rate			2005		2004
Mortgage notes payable:
Palomino Park Bonds (A)	May 2005		Variable		$	--	$	12,680,000
Blue Ridge Mortgage	December 2007		6.92%	(B)		--		31,407,000
Red Canyon Mortgage	December 2008		6.68%	(B)		--		24,885,000
Green River Mortgage	March 2013		5.45%	(B)		--		39,055,000
East Lyme Construction Loan	December 2007		LIBOR + 2.15%	(C)		7,226,000		361,000
Gold Peak Construction Loan	November 2009		LIBOR + 1.65%	(C)		11,575,000		--
Claverack Construction Loan	December 2006		LIBOR + 2.20%	(C)(D)		449,000		--
Claverack Mortgage	February 2010		7.00%	(E)		--		465,000
Total mortgage notes payable					$	19,250,000	$	108,853,000
Carrying amount of real estate assets
collateralizing mortgage notes
payable					$	39,000,000	$	129,000,000

(A)	Tax-exempt bonds were secured by liens on four of the five phases of Palomino Park (see below).
(B)	Principal payments were made based on a 30-year amortization schedule. Mortgages were retired upon the respective sale of Palomino Park rental phases.
(C)	Principal payments will be made from sales proceeds upon the sale of individual homes.
(D)	The Claverack Construction Loan is jointly guaranteed by the Company and the principal of its joint venture partner.
(E)	This mortgage was assumed at the formation of Claverack. The balance of the Claverack Mortgage was retired in December 2005.

In December 1995, the Trust marketed and sold $14,755,000 of tax-exempt bonds to fund construction at Palomino Park (the "Palomino Park Bonds"). Initially, all five phases of Palomino Park were collateral for the Palomino Park Bonds. The Palomino Park Bonds had an outstanding balance of $12,680,000 at December 31, 2004 and were collateralized by four phases at Palomino Park. In January 2005, the Palomino Park Bonds were paid down by $2,275,000 in order to release the Gold Peak phase from the bond collateral. A five-year letter of credit from Commerzbank AG had secured the Palomino Park Bonds and a subsidiary of EQR had guaranteed Commerzbank AG's letter of credit. The Company retired the $10,405,000 balance of this obligation prior to the expiration of the letter of credit and EQR's guarantee in May 2005.

The Company incurred aggregate fees of approximately $54,000, $240,000 and $230,000 for the years ended December 31, 2005, 2004 and 2003, respectively, related to all of the credit enhancement costs for the Palomino Park Bonds.

The East Lyme Construction Loan requires the Company to have a minimum net worth, as defined, of $50,000,000. As a result of the December 14, 2005 distribution of approximately $90,597,000 to the stockholders, the Company may be required to make an additional $2,000,000 cash collateral deposit for

F-20

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Debt (continued)

the East Lyme Construction Loan and a $2,000,000 paydown of the Gold Peak Construction Loan. The Company is required to maintain minimum liquidity levels at each quarter end for the East Lyme and Gold Peak Construction Loans, the most restrictive of which is $10,000,000.

The bank providing the East Lyme Construction Loan has also provided a $3,000,000 letter of credit to a municipality in connection with the East Lyme project. The Company has posted $1,300,000 of restricted cash as collateral for this letter of credit.

The Company's scheduled long-term maturities of construction debt for the next four years are as follows:

For the Years Ended December 31, *	Construction Loans
2006	$	449,000
2007		7,226,000
2008		--
2009		11,575,000
Total	$	19,250,000

* Excludes payments expected to be made from sales proceeds.

The Company capitalizes interest related to the development of single family homes and condominiums under construction to the extent such assets qualify for capitalization. Approximately $131,000, $1,375,000 and $490,000 was capitalized during the period November 18, 2005 to December 31, 2005, the period January 1, 2005 to November 17, 2005 and for the year ended December 31, 2004, respectively. No interest was capitalized during the year ended December 31, 2003.

5.

Convertible Trust Preferred Securities/Debentures In May 2000, the Company privately placed with a subsidiary of EQR 1,000,000 8.25% Convertible Trust Preferred Securities, representing beneficial interests in the assets of WRP Convertible Trust I, a Delaware statutory business trust which was a consolidated subsidiary of the Company ("WRP Trust I"), with an aggregate liquidation amount of $25,000,000. WRP Trust I also issued 31,000 8.25% Convertible Trust Common Securities to the Company, representing beneficial interests in the assets of WRP Trust I, with an aggregate liquidation amount of $775,000. The proceeds from both transactions were used by WRP Trust I to purchase $25,775,000 of the Company's 8.25% convertible junior subordinated debentures. The transactions between WRP Trust I and the Company were eliminated in the consolidated financial statements of the Company prior to 2004. The Company incurred approximately $450,000 of costs in connection with the issuance of the securities which was being amortized through May 2012. The Convertible Trust Preferred Securities were convertible into 1,123,696 common shares at $22.248 per share and redeemable in whole or in part by the Company on or after May 30, 2002. In March 2005, the Company notified EQR of its intent to redeem for cash its outstanding $25,000,000 of Convertible Trust Preferred Securities and then completed the redemption during April 2005. During the first quarter of 2004, based on the provisions of FIN46R, the Company was required to de-consolidate the entity which issued the Convertible Trust Preferred Securities. The provisions of FIN46R do not allow for a reclassification of prior period presentations to conform with the current

F-21

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Convertible Trust Preferred Securities/Debentures (continued) period presentation. As a result of de-consolidation, the Company recorded its $775,000 voting equity interest in WRP Trust I as an investment in joint ventures. WRP Trust I held the $25,775,000 of Debentures, which was included in total liabilities at December 31, 2004 on the balance sheet, rather than the $25,000,000 of previously reported Convertible Trust Preferred Securities. The $775,000 voting equity interest had previously been eliminated in consolidation. The expense of approximately $824,000 and $2,100,000 for the Debentures includes related cost amortization and in 2005 the write-off of the unamortized balance, which is included in interest expense for the period January 1, 2005 to November 17, 2005 and the year ended December 31, 2004, respectively. The expense for the 2003 period is included in accrued distributions and amortization of costs on Convertible Trust Preferred Securities on the statement of operations and reported net of taxes. There was no impact on the cash flows of the Company upon de-consolidation of this VIE.

6.

Income Taxes The components of the income tax expense (benefit) from continuing operations are as follows:

	For the Period January 1 to November 17,			For the Years Ended December 31,
	2005			2004			2003
Current federal tax	$	--		$	--		$	--
Current state and local tax		200,000			170,000			293,000
Deferred federal tax		32,000			(753,000	)		7,090,000
Deferred state and local tax		(141,000	)		453,000			(248,000	)
Income tax expense (benefit)	$	91,000		$	(130,000	)	$	7,135,000

The reconciliation of income tax computed at the U.S. Federal statutory rate to income tax (benefit) expense for continuing operations is as follows:

	For the Period January 1 to						For the Years Ended December 31,
	November 17, 2005						2004						2003
	Amount			Percent			Amount			Percent			Amount			Percent
Tax (benefit) at U.S. statutory rate	$	1,088,000			35.00	%	$	(11,745,000	)		(35.00	%)	$	(12,826,000	)	(35.00	%)
State taxes, net of federal benefit		38,000			1.23	%		405,000			1.21	%		29,000		0.08	%
Change in valuation allowance, net		(921,000	)		(29.63	%)		10,963,000			32.67	%		19,551,000		53.35	%
Non-deductible/non-taxable items,
net		(83,000	)		(2.68	%)		(89,000	)		(0.27	%)		15,000		0.04	%
Effect of difference in tax rate		(31,000	)		(1.00	%)		336,000			1.00	%		366,000		1.00	%
	$	91,000			2.92	%	$	(130,000	)		(0.39	%)	$	7,135,000		19.47	%

The Company has net operating loss ("NOL") carryforwards, for Federal income tax purposes, resulting from the Company's merger with Value Property Trust ("VLP") in 1998 and its operating loss in 2004. The NOLs aggregate approximately $61,100,000 at December 31, 2005, expire in the years 2007 through 2024 and, except for the 2004 loss, are subject to an annual and aggregate limit on utilization of NOLs after an ownership change, pursuant to Section 382 of the Internal Revenue Code. Ownership changes as set forth in Section 382 may have occurred during 2005. Any limitation on the utilization of NOLs may be mitigated as a result of recognizing any net unrealized built-in gains that existed at ownership change dates. If the Company determines that such a change in ownership did occur during 2005, there would not be a material impact to the accompanying consolidated financial statements.

F-22

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Income Taxes (continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes including the liquidation basis in 2005 and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

	December 31,
	2005			2004
	(Liquidation Basis)			(Going Concern Basis)
Deferred Tax Assets
Net operating and capital loss carryforwards	$	20,794,097		$	27,481,111
Asset basis differences - tax greater than liquidation value		3,329,891			--
Deferred compensation arrangements		6,300,830			5,676,612
Wellsford/Whitehall asset basis differences		178,579			22,608,140
AMT credit carryforwards		654,686			654,686
Reserve for estimated liquidation costs		10,783,647			--
Other		435,466			554,938
		42,477,196			56,975,487
Valuation allowance		(33,983,552	)		(53,627,545	)
Total deferred tax assets		8,493,644			3,347,942
Deferred Tax Liabilities
Asset basis differences - liquidation value greater than tax		(9,034,719	)		--
Palomino Park basis differences		--			(3,177,025	)
Deferred gain on sale of Liberty Hampshire		--			(419,097	)
Other		(40,053	)		--
Total deferred tax liabilities		(9,074,772	)		(3,596,122	)
Net deferred tax (liability)	$	(581,128	)	$	(248,180	)

The Company's net deferred tax liabilities are included in accrued expenses and other liabilities at December 31, 2005 and 2004 in the accompanying Consolidated Statement of Net Assets in Liquidation and Consolidated Balance Sheet, respectively.

The deferred tax assets and liabilities at December 31, 2005 take into consideration the recordation of assets at estimated net realizable value. In addition, the reserve for estimated liquidation costs can only be utilized for tax purposes in the years when such costs are incurred. The impact of the adoption of the liquidation basis of accounting resulted in the Company recording an additional net deferred tax liability of $443,000 at December 31, 2005, after reserves.

SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, management has determined that valuation allowances of approximately $33,984,000 and $53,628,000 at December 31, 2005 and 2004, respectively, are necessary. The valuation allowance at December 31, 2005 and 2004 primarily relates to reserving a substantial portion of the NOLs, the impact of deferred compensation arrangements and alternative minimum tax credit carryforwards. The 2005 amount also includes reserving all of the assets where the tax basis is greater than the liquidation value and a portion of the reserve for estimated liquidation costs. The 2004 amount also includes reserving the differences in the basis of the Company's investment in Wellsford/Whitehall. As a result of the significant tax gain on the sale of the Company's Palomino Park rental project together with the realization for tax purposes of almost all of the Wellsford/Whitehall tax basis differences and the

F-23

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Income Taxes (continued)

utilization of a portion of available NOLs to offset the Palomino Park gain, the Company was able to reduce the valuation allowance from the 2004 amount. This accounts for the $19,644,000 net reduction in the allowance during the year ended December 31, 2005.

7. Transactions With Affiliates

The following table details revenues and expenses for transactions with affiliates:

	For the Period November 18 to December 31,		For the Period January 1 to November 17,		For the Years Ended December 31,
	2005		2005		2004		2003
Revenues:
WP Commercial fees (A):
Asset disposition fee revenue	$	--	$	518,000	$	46,000	$	430,000
Second Holding fees, net of fees paid to Reis of
$100,000 and $120,000 in 2004 and 2003,
respectively (B)		--		--		751,000		930,000
	$	--	$	518,000	$	797,000	$	1,360,000
Costs and expenses:
EQR credit enhancement	$	--	$	9,000	$	81,000	$	81,000
Fees to our partners, or their affiliates, on
residential development projects		83,000		595,000		431,000		--
	$	83,000	$	604,000	$	512,000	$	81,000

(A)

Wellsford/Whitehall is a joint venture by and among the Company, various entities affiliated with the Whitehall Funds ("Whitehall"), private real estate funds sponsored by The Goldman Sachs Group, Inc. ("Goldman Sachs"). The managing member ("WP Commercial") is a Goldman Sachs and Whitehall affiliate. See Footnote 11 for additional information. The Company's investment in Wellsford/Whitehall was redeemed in September 2005.

(B)

The Company sold its investment in Second Holding in November 2004 and earned management fees through the date of the sale.

The Company had an approximate 51.09% non-controlling interest in a joint venture special purpose finance company, Second Holding, organized to purchase investment and non-investment grade rated real estate debt instruments and investment grade rated other asset-backed securities. An affiliate of a significant shareholder of the Company, the Caroline Hunt Trust Estate, (which owns 405,500 shares of common stock of the Company at December 31, 2005 and 2004 ("Hunt Trust")) together with other Hunt Trust related entities, own an approximate 39% interest in Second Holding. In the fourth quarter of 2004, the Company sold its interest in Second Holding for $15,000,000 in cash. The Company has direct and indirect equity investments in Reis, a real estate information and database company, which provides real estate market information to institutional investors. At December 31, 2005, the carrying amount of the Company's aggregate investment in Reis was approximately $20,000,000 (liquidation basis). This investment represents approximately 21% of Reis' equity on an as converted basis at December 31, 2005. Such investment, which had previously been accounted for on a cost basis, amounted to $6,790,000 at December 31, 2004. The president and primary common shareholder of Reis is the brother of Mr. Lynford, the Chairman, President and Chief Executive Officer of the Company. Mr. Lowenthal, the Company's former President and Chief Executive Officer, who currently serves on the Company's Board, has served on the board of directors of Reis since the third quarter of 2000. Messrs. Lynford and Lowenthal have and will continue to recuse themselves from any investment decisions made by the Company pertaining to Reis.

F-24

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Transactions With Affiliates (continued)

A portion of the Reis investment is held directly by the Company and the remainder is held by Reis Capital Holdings, LLC ("Reis Capital"), a company which was organized to hold this investment. The Company has an approximate 51.09% non-controlling interest in Reis Capital. The Hunt Trust who, together with other Hunt Trust related entities, own an approximate 39% interest in Reis Capital.

The pro rata converted interests in Reis owned by the other partners of Reis Capital, either directly or indirectly through Reis Capital aggregate approximately 18%. Investments by the Company's officers and directors at December 31, 2005, together with shares of common stock previously held by Mr. Lynford represent approximately 2% of Reis' equity, on an as converted basis. Additionally, a company controlled by the Chairman of EQR owns Series C and Series D Preferred Shares in Reis which aggregate to an approximate 4% converted interest.

Reis provided information to Second Holding for due diligence procedures on certain real estate-related investment opportunities through October 31, 2004. Second Holding incurred fees of $200,000 and $240,000 in connection with such services for each of the years ended December 31, 2004 and 2003, respectively. The Company's share of such fees was $100,000 and $120,000 for the years ended December 31, 2004 and 2003, respectively.

Messrs. Lynford and Lowenthal were members of the EQR board of directors from the date of the Merger through their retirements from the EQR board in May 2003. In addition, the former president and vice chairman of EQR, Mr. Crocker, is a member of the Company's Board. Mr. Neithercut, the current president and Chief Executive Officer of EQR, was elected to the Company's Board on January 1, 2004 to represent EQR's interests in the Company. Mr. Neithercut resigned as a director in April 2005. EQR had a 7.075% and a 14.15% interest in the Company's residential project in Denver, Colorado at December 31, 2005 and 2004, respectively, and provided credit enhancement for the Palomino Park Bonds through May 2005. A subsidiary of EQR was the holder of the Convertible Trust Preferred Securities and the 169,903 shares of class A-1 common stock of the Company. On January 25, 2006, EQR, the sole holder of the outstanding class A-1 common shares, converted its 169,903 class A-1 shares to common shares.

With respect to EQR's 14.15% interest at December 31, 2004 in the corporation that owns Palomino Park, there existed a put/call option between the Company and EQR related to one-half of such interest (7.075%). In February 2005, the Company informed EQR of its intent to exercise this option at a purchase price of $2,087,000. This transaction was completed in October 2005. Aggregate distributions from the subsidiary corporation's available cash and sales proceeds of approximately $4,080,000 were made to EQR during 2005.

On January 27, 2006, a company which is owned by Messrs. Lynford and Lowenthal, the principal of the Company's joint venture partner in the East Lyme project and others acquired the Beekman project at the Company's aggregate cost of approximately $1,297,000. This was accomplished through a sale of the entities that owned the Beekman project. See Footnote 8 for additional information.

See Footnote 11 for additional related party information.

F-25

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

8. Shareholders' Equity

The following table presents information regarding the Company's securities:

	Shares Issued and Outstanding at December 31,
	2005		2004
Series A 8% convertible redeemable preferred stock, $.01 par
value per share, 2,000,000 shares authorized		--		--
Common stock, 98,825,000 shares authorized, $.02 par value per
share		6,301,276		6,296,620
Class A-1 common stock, 175,000 shares authorized, $.02 par
value per share		169,903		169,903
Total common stock, all classes		6,471,179		6,466,523

The Company has issued shares of common stock to executive officers and other employees through periodic annual bonus awards, as well as certain shares issued at the date of the Merger, which officers and employees could have elected to contribute into the Rabbi Trust. At December 31, 2005, an aggregate of 256,487 shares of common stock (which had an aggregate market value of approximately $1,539,000 based on the Company's December 30, 2005 closing stock price of $6.00 per share), are in the Rabbi Trust and have been classified as Treasury Stock in the Company's consolidated financial statements. Historically, awards of Company stock vested over various periods ranging from two to five years, as long as the officer or employee was still employed by the Company. Four officers of the Company elected to have the balance of their respective deferred compensation accounts (aggregating 39,200 shares) distributed to them in December 2005 under the terms of an amendment to the deferred compensation plan. In addition, an aggregate of approximately $993,000 of cash from the $14.00 per share liquidating distribution and other investments was distributed to these officers. The following table presents changes to the stock held in the Rabbi Trust for the years ended December 31, 2005, 2004 and 2003:

	For the Years Ended December 31,
	2005					2004					2003
	Number of Shares			Value at Date of Issuance		Number of Shares			Value at Date of Issuance		Number of Shares			Value at Date of Issuance
Shares issued pursuant to plan,
January 1		302,062					305,249					311,624
Shares released under terms of
agreement		(45,575	)	$	16.09		(3,187	)	$	15.69		(6,375	)	$	15.69
Balance at December 31		256,487					302,062					305,249
Shares vested at December 31		256,487					302,062					305,249

At December 31, 2005, all shares and assets held by the Rabbi Trust were for the benefit of Messrs. Lynford and Lowenthal. On January 27, 2006, the subsidiary holding the balance of the shares in the Rabbi Trust as well as all other assets held by the Rabbi Trust was acquired by an entity owned by Messrs. Lynford and Lowenthal, the principal of the Company's joint venture partner in the East Lyme project and others along with the acquisition of the Beekman assets. The Company was relieved of the remaining deferred compensation liability which amounted to approximately $14,721,000 at December 31, 2005.

The Company issued an aggregate of 3,836 common shares during 2004 as part of the non-cash compensation arrangements to the non-employee members of the Company's Board, which were valued in the aggregate at $64,000. Director compensation for 2005 was modified to exclude the issuance of options and stock in exchange for a cash payment.

F-26

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Shareholders' Equity (continued) The Company's common stock and class A-1 common stock has a par value of $0.02 per share. For the years ended December 31, 2005, 2004 and 2003 both classes of stock had rights that were substantially similar to each other including voting rights where each share of common stock and class A-1 common stock was entitled to one vote and equal voting rights. On January 25, 2006, EQR, the sole holder of the outstanding class A-1 common shares, converted its 169,903 class A-1 shares to common shares. The Company made its initial liquidating distribution of $14.00 per share on December 14, 2005. The Company did not declare or distribute any other dividends during 2005 and 2004.

9.

Share Option Plans The Company has adopted certain incentive plans (the "Incentive Plans") for the purpose of attracting and retaining the Company's directors, officers and employees under which it had reserved 2,538,118 common shares for issuance. Options granted under the Incentive Plans expire ten years from the date of grant, vest over periods ranging generally from immediate vesting to up to five years and generally contain the right to receive reload options under certain conditions. The following table presents the changes in options outstanding by year, the effect of the following adjustments on the December 31, 2005 balances (see below) and other plan data:

	2005						2004						2003
	Options			Weighted-Average Exercise Price			Options			Weighted-Average Exercise Price			Options			Weighted-Average Exercise Price
Outstanding at January 1		662,979		$	20.15			665,672		$	20.16			772,186		$	20.09
Granted		--			--			10,000			14.48			10,000			18.58
Exercised		(3,540	)		(15.84	)		(6,693	)		(14.68	)		--			--
Forfeited/cancelled/expired		(138,774	)		(20.74	)		(6,000	)		(17.82	)		(116,514	)		(19.59	)
Outstanding at December 31		520,665			20.02			662,979			20.15			665,672			20.16
Outstanding at December 31, 2005,
as adjusted		1,845,584		$	5.65
Options exercisable at December 31		520,665		$	20.02			662,979		$	20.15			657,597		$	20.19
Options exercisable at December 31,
2005, as adjusted		1,845,584		$	5.65
Weighted average fair value of options
granted per year (per option)	$	--					$	7.15					$	9.36
Weighted average remaining
contractual life at December 31		2.6 years						2.7 years						3.5 years

As permitted by the Plan and in accordance with the provisions of the Company's option plans, applicable accounting and the American Stock Exchange rules and Federal income tax laws, the Company's outstanding stock options have been adjusted to prevent a dilution of benefits to option holders arising from a reduction in value of the Company's common shares as a result of the $14.00 per share initial liquidating cash distribution made to stockholders. The adjustment reduces the exercise price of the outstanding options by the ratio of the price of a common share immediately after the distribution ($5.60 per share) to the stock price immediately before the distribution ($19.85 per share) and increases the number of common shares subject to outstanding options by the reciprocal of the ratio. As a result of this adjustment, the 520,665 options outstanding as of December 31, 2005 will be

F-27

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Share Option Plans (continued)

converted into options to acquire 1,845,584 common shares and the weighted average exercise price of such options will decrease from $20.02 per share to $5.65 per share. The Board approved these option adjustments on January 26, 2006. These adjustments do not result in a new grant and would not have any financial statement impact. At the same time, the Board authorized amendments to outstanding options to allow an option holder to receive from the Company, in cancellation of the holder's option, a cash payment with respect to each cancelled option equal to the amount by which the fair market value of the share of stock underlying the option exceeds the exercise price of such option. Additionally, certain non-qualified out of the money options which had original maturity dates prior to December 31, 2008, were extended by the Board to the later of December 31 of the year of original expiration or the 15th day of the third month following the date of the original expiration.

The following table provides information regarding these extended options:

Options As Historically Presented	Options As Adjusted	Initial Maturity Date	Extended Maturity Date
370,355	1,312,777	May 29, 2007	December 31, 2007
7,500	26,586	December 4, 2007	March 15, 2008
377,855	1,339,363

The following table presents additional option details at December 31, 2005 reflecting the impact of the previously described adjustments:

	Options Outstanding and Exercisable
Range of Exercise Prices	Outstanding	Remaining Contractual Life (Years)	Weighted Average Exercise Price
$4.09 to $4.55	150,653	5.40	$4.37
$ 4.60	64,248	3.63	4.60
$ 5.03	53,171	2.77	5.03
$5.18 to $5.57	171,918	4.82	5.26
$ 5.81	1,361,285	2.00	5.81
$8.39 to $8.89	44,309	2.00	8.69
	1,845,584	2.62	5.65

Pursuant to SFAS No. 148, the pro forma net (loss) available to common shareholders as if the fair value approach to accounting for share-based compensation had been applied (as well as the assumptions to calculate fair value on each year's respective option grants using the Black-Scholes option pricing model) is as follows:

F-28

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Share Option Plans (continued)

(amounts in thousands, except per share amounts)	For the Years Ended December 31,
	2004			2003
Net (loss) - as reported	$	(32,703	)	$	(45,859	)
Add stock option expense included in net (loss) as
reported, net of tax		72			94
Deduct fair value expense for stock options, net of tax		(146	)		(249	)
Net (loss) - pro forma	$	(32,777	)	$	(46,014	)
Net (loss) per common share, basic and diluted:
As reported	$	(5.06	)	$	(7.11	)
Pro forma	$	(5.07	)	$	(7.13	)
Assumptions:
Expected volatility		29%			30%
Expected life		10 years			10 years
Risk-free interest rate		4.24%			4.27%
Expected dividend yield		--			--

The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions including the expected share price volatility. Because the Company's employee share options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee share options.

During 2003, the Company adopted the prospective method to transition to a fair value basis of accounting for stock option grants in accordance with SFAS No. 148. For the years ended December 31, 2004 and 2003, the Company recorded an expense of $72,000 and $94,000, respectively, related to the 10,000 options granted during each period. No options were granted in 2005 as a result of changes in the method of compensating directors.

10. Commitments and Contingencies

The Company has employment, severance and retention arrangements with seven of its officers and employees. Such arrangements are for terms which expire during 2006, 2007 or have automatic renewal provisions. The Company estimates that approximately $8,842,000 will be paid related to these arrangements, the majority of which is included in the Reserve for Estimated Costs during the Period of Liquidation. This amount includes current contractual obligations over the 36 month estimated time period of the Plan and certain estimated employment expenses by the liquidating trust.

In 2004, the Company made a contractual payment of $643,000 to Mr. Lynford upon the sale of Second Holding and expensed $1,286,000 during 2005 as a result of the sale of properties by Wellsford/Whitehall and the sale of the Palomino Park residential rental phases under the terms of his contract. In 2005, the Company paid $643,000 with the remaining $643,000 paid in January 2006. No further payments are due under these provisions of his contract. In January 2006, a $605,000 incentive bonus payment was made to Mr. Strong, Senior Vice President - Development, as a result of meeting certain IRR hurdles under his contract from the sale of the Palomino Park phases in 2005. Such amount was expensed at the time of the sale in 2005.

F-29

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Commitments and Contingencies (continued)

From time-to-time, legal actions may be brought against the Company in the ordinary course of business. There can be no assurance that such matters will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.

In 1997, the Company adopted a defined contribution savings plan pursuant to Section 401 of the Internal Revenue Code. Under such a plan there are no prior service costs. All employees are eligible to participate in the plan after three months of service. Employer contributions, if any, are made based on a discretionary amount determined by the Company's management. The Company made contributions to this plan of approximately $31,000 during each of the years ended December 31, 2005, 2004 and 2003.

The Company is a tenant under an operating lease for its New York office through October 2008. Rent expense was approximately $817,000, $921,000 and $887,000 during the period January 1, 2005 to November 17, 2005 and for the years ended December 31, 2004 and 2003, respectively, which includes base rent plus other charges including, but not limited to, real estate taxes and maintenance costs in excess of base year amounts. Future minimum lease payments under the operating lease at December 31, 2005 are as follows:

For the Years Ended December 31,	Amount
2006	$	815,300
2007		815,300
2008		679,400

See Footnote 11 for additional commitments and contingencies.

F-30

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

11. Segment Information

The Company's operations are organized into three SBUs. The following table presents condensed balance sheet and operating data for these SBUs:

(amounts in thousands)	Commercial		Debt and			Residential Activities
	Property Activities		Equity Activities			Palomino Park			Other Developments			Other*			Consolidated
For the Period January 1 to November 17, 2005 (Going Concern Basis)
Rental revenue	$	--	$	--		$	12,153		$	--		$	--		$	12,153
Revenue from sales of residential units		--		--			488			--			--			488
Interest revenue		--		66			--			10			1,475			1,551
Fee revenue		--		--			--			--			518			518
Total revenues		--		66			12,641			10			1,993			14,710
Cost of sales of residential units		--		--			386			--			--			386
Operating expenses		--		--			5,835			145			--			5,980
Depreciation and amortization		--		--			3,794			5			88			3,887
Interest expense		--		(32	)		5,036			(576	)		1,054			5,482
General and administrative		--		--			--			--			7,888			7,888
Total costs and expenses		--		(32	)		15,051			(426	)		9,030			23,623
Income from joint ventures		11,148		702			--			--			--			11,850
Minority interest benefit		--		--			111			61			--			172
Income (loss) before income taxes and
discontinued operations	$	11,148	$	800		$	(2,299	)	$	497		$	(7,037	)	$	3,109

* Includes general and administrative expenses, interest income and interest expense that has not been allocated to the operating segments.

F-31

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

(amounts in thousands)	Commercial			Debt and			Residential Activities
	Property Activities			Equity Activities			Palomino Park			Other Developments			Other*			Consolidated
December 31, 2004 (Going Concern Basis)
Investment properties:
Real estate held for investment, net	$	--		$	--		$	111,280		$	--		$	--		$	111,280
Residential units available for sale		--			--			354			--			--			354
Construction in process		--			533			6,094			11,983			--			18,610
Real estate, net		--			533			117,728			11,983			--			130,244
Notes receivable		--			1,032			--			158			--			1,190
Investment in joint ventures		4,229			8,981			--			--			775			13,985
Cash and cash equivalents		--			1,580			314			279			63,691			65,864
Restricted cash and investments		--			--			533			2,844			10,157			13,534
U.S. Government securities		--			--			--			--			27,551			27,551
Prepaid and other assets		--			--			1,221			47			1,001			2,269
Total assets	$	4,229		$	12,126		$	119,796		$	15,311		$	103,175		$	254,637
Mortgage notes payable	$	--		$	--		$	108,027		$	826		$	--		$	108,853
Debentures		--			--			--			--			25,775			25,775
Accrued expenses and other liabilities		--			5			2,620			122			14,056			16,803
Minority interests		--			59			3,331			1,034			--			4,424
Total shareholders' equity		4,229			12,062			5,818			13,329			63,344			98,782
Total liabilities and shareholders'
equity	$	4,229		$	12,126		$	119,796		$	15,311		$	103,175		$	254,637
For the Year Ended December 31, 2004 (Going Concern Basis)
Rental revenue	$	--		$	--		$	13,367		$	--		$	--		$	13,367
Revenue from sales of residential units		--			--			12,288			--			--			12,288
Interest revenue		--			194			--			2			1,001			1,197
Fee revenue		--			751			--			--			46			797
Total revenues		--			945			25,655			2			1,047			27,649
Cost of sales of residential units		--			--			10,131			--			--			10,131
Operating expenses		--			35			6,170			88			--			6,293
Depreciation and amortization		--			238			4,315			--			83			4,636
Interest expense		--			(27	)		5,280			(338	)		3,334			8,249
General and administrative		--			656			--			--			7,615			8,271
Total costs and expenses		--			902			25,896			(250	)		11,032			37,580
(Loss) from joint ventures		(10,437	)		(13,278	)		--			--			--			(23,715	)
Minority interest benefit		--			35			22			31			--			88
(Loss) income before income taxes and
discontinued operations	$	(10,437	)	$	(13,200	)	$	(219	)	$	283		$	(9,985	)	$	(33,558	)
Income from discontinued operations
before income taxes	$	--		$	805		$	--		$	--		$	--		$	805

* Includes corporate cash, restricted cash and investments, U.S. Government securities, other assets, accrued expenses and other liabilities, general and administrative expenses, interest income and interest expense that has not been allocated to the operating segments.

F-32

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

(amounts in thousands)	Commercial Property Activities			Debt and Equity Activities			Residential Activities			Other*			Consolidated
For the Year Ended December 31, 2003 (Going Concern Basis)
Rental revenue	$	--		$	--		$	14,256		$	--		$	14,256
Revenue from sales of residential units		--			--			12,535			--			12,535
Interest revenue		--			6,927			--			524			7,451
Fee revenue		--			940			(10	)		430			1,360
Total revenues		--			7,867			26,781			954			35,602
Cost of sales of residential units		--			--			10,708			--			10,708
Operating expenses		--			6			6,478			--			6,484
Depreciation and amortization		3,968			59			4,414			96			8,537
Interest		--			(2	)		6,095			490			6,583
General and administrative		--			51			--			5,540			5,591
Total costs and expenses		3,968			114			27,695			6,126			37,903
(Loss) income from joint ventures		(36,473	)		2,044			--			--			(34,429	)
Minority interest benefit		--			6			79			--			85
(Loss) income before income taxes,
accrued distributions and
amortization of costs on Convertible
Trust Preferred Securities and
discontinued operations	$	(40,441	)	$	9,803		$	(835	)	$	(5,172	)	$	(36,645	)
Income from discontinued operations
before income taxes	$	--		$	36		$	--		$	--		$	36

* Includes general and administrative expenses, interest income and interest expense that has not been allocated to the operating segments.

Commercial Property Activities

The Company's primary commercial property activities and its sole activity in this SBU consisted of its interest in Wellsford/Whitehall, a joint venture by and among the Company, various entities affiliated with Whitehall and private real estate funds sponsored by Goldman Sachs. The Company's interest in Wellsford/Whitehall was 35.21% at December 31, 2004. The managing member was a Goldman Sachs and Whitehall affiliate.

Wellsford/Whitehall was originally organized as a private real estate operating company which leased and re-leased space, performed construction for tenant improvements, expanded buildings, re-developed properties and based on general and local economic conditions and specific conditions in the real estate industry, sold properties for an appropriate price.

In September 2005, the Company ceased its Commercial Property Activities when its equity interest in Wellsford/Whitehall was redeemed for approximately $8,300,000 plus certain modest contingent payments to be received in the future. Approximately $141,000 was received in December 2005. The Company realized an aggregate gain on the redemption of its interests of $5,986,000 in 2005. The Company does not expect to receive any additional payments from its investment in Wellsford/Whitehall. At the time of the redemption of the Company's interest in September 2005, Wellsford/Whitehall owned one office building and a parcel of land, both located in New Jersey.

F-33

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

The Company's investment in Wellsford/Whitehall, which was accounted for on the equity method, was approximately $4,299,000 at December 31, 2004.

The following table details the changes in the Company's investment in Wellsford/Whitehall:

(amounts in thousands)
	2005			2004
Investment balance at January 1,	$	4,229		$	14,616
Distributions		(7,042	)		--
Share of (through September 23, 2005):
(Loss) from operations		(839	)		(3,307	)
Net gain from asset disposition
transactions		6,000			289
Impairment provisions		--			(7,419	)
Other comprehensive income		--			50
Proceeds from redemption of interest less
minority stockholders' interest and
transaction costs		(8,334	)		--
Gain on redemption of interest		5,986			--
Investment balance at December 31,	$	--		$	4,229

The following table presents condensed balance sheet data at December 31, 2004 and condensed operating data for the years ended December 31, 2005, 2004 and 2003 for Wellsford/Whitehall:

(amounts in thousands)
Condensed Balance Sheet Data	December 31, 2004
Real estate, net	$	9,685
Cash and cash equivalents		2,280
Assets held for sale		138,809
Total assets		162,368
Notes payable		113,887
Liabilities attributable to assets held for sale		15,880
Members' equity		28,766
	For the Years Ended December 31,
Condensed Operating Data	2005			2004			2003 (A)
Rental revenue	$	1,047		$	1,042		$	1,112
Interest and other income		534			593			377
Total revenues		1,581			1,635			1,489
Operating expenses		900			850			916
Depreciation and amortization		625			668			635
Interest		390			597			351
General and administrative		43			195			329
Total expenses		1,958			2,310			2,231
(Loss) from impairment		(453	)		(3,306	)		--
(Loss) before discontinued operations		(830	)		(3,981	)		(742	)
Income (loss) from discontinued operations (B)		15,136			(26,165	)		(111,174	)
Net income (loss)	$	14,306		$	(30,146	)	$	(111,916	)

(A)	Operations reclassified for assets held for sale.
(B)	Includes impairment provisions of $21,069 and $114,700 for 2004 and 2003, respectively. See below.

F-34

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

Since the beginning of 2001, Wellsford/Whitehall has completed the following number of property sales or transfers:

Year	Number of Properties
2005	15
2004	8
2003	11
2002	1
2001	11

In May 2005, Wellsford/Whitehall completed the sale of a building in Ridgefield Park, New Jersey, for $31,400,000. Approximately $10,500,000 of the net proceeds and $8,000,000 of restricted cash were used to retire all outstanding mortgage indebtedness, leaving Wellsford/Whitehall without any mortgage debt. Wellsford/Whitehall reported a gain of approximately $10,100,000 on this transaction, of which the Company's share was approximately $3,500,000.

In April 2005, Wellsford/Whitehall completed the sale of a building in Needham, Massachusetts, for $37,500,000. Approximately $18,400,000 of the net proceeds were used to pay existing debt. Wellsford/Whitehall reported a gain of approximately $7,000,000 on this transaction, of which the Company's share was approximately $2,500,000.

In January 2005, Wellsford/Whitehall completed the sale of a portfolio of seven office properties and a land parcel for approximately $72,000,000, after selling and other costs. The properties are all located in New Jersey. Substantially all of the net proceeds from the sale and unrestricted cash and certain related reserve funds aggregating approximately $5,000,000, were used to retire existing debt. Additionally, in January 2005, Wellsford/Whitehall completed the sale of five retail stores for an aggregate sales price of $17,100,000, after selling costs. The net proceeds from the sale of the retail stores of approximately $1,300,000, after payment of related debt, were available to be used by Wellsford/Whitehall for working capital purposes. During the fourth quarter of 2004, Wellsford/Whitehall recorded an impairment loss provision of approximately $21,069,000 relating to the January 2005 sales (of which the Company's share was approximately $7,419,000).

During July 2004, Wellsford/Whitehall completed a transaction whereby it transferred six of its Massachusetts properties, which were subject to mortgage debt of approximately $64,200,000 along with a land parcel, related restricted cash balances aggregating $6,428,000, cash and certain other consideration to a newly formed partnership which includes the New England family (the "Family") that, at that time, owned an aggregate 7.45% equity interest in Wellsford/Whitehall (the "Family Partnership"), in redemption of the Family's equity interests in Wellsford/Whitehall (the "Redemption Transaction"). As a result of this transaction, Wellsford/Whitehall recorded a loss of approximately $4,306,000 during the third quarter of 2004, of which the Company's share was approximately $1,403,000. At the time of the Redemption Transaction, there was an elimination of an existing tax indemnity which Wellsford/Whitehall had to the Family's members. The economic effect of this tax indemnity restricted most future asset sales through 2007 and required a minimum amount of non-recourse debt on Wellsford/Whitehall's balance sheet; such restrictions no longer remained and Wellsford/Whitehall was allowed to proceed with its sales program as described above.

F-35

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

During 2003, the Company's share of impairment provisions recorded by Wellsford/Whitehall amounted to $37,377,000. In addition, the Company wrote off $2,644,000 of related unamortized warrant costs on its books in 2003.

WP Commercial provided management, construction, development and leasing services to Wellsford/Whitehall based on an agreed upon fee schedule. WP Commercial received an administrative management fee of 93 basis points on a predetermined value for each asset in the Wellsford/Whitehall portfolio. As Wellsford/Whitehall sold assets, the basis used to determine the fee was reduced by the respective asset's predetermined value six months after the completion of such sales. During the years ended December 31, 2005, 2004 and 2003, respectively, Wellsford/Whitehall paid the following fees to WP Commercial or one of its affiliates, including amounts reflected in discontinued operations of Wellsford/Whitehall:

	For the Years Ended December 31,
	2005		2004		2003
Administrative management	$	1,834,000	$	3,715,000	$	4,604,000
Construction, construction management,
development and leasing	$	75,000	$	784,000	$	1,925,000
Financing fee	$	750,000	$	--	$	--

Whitehall paid the Company fees with respect to assets disposed of by Wellsford/Whitehall and for certain acquisitions of real estate made by certain other affiliates of Whitehall. Such fees aggregated $518,000, $46,000 and $430,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

Debt and Equity Activities

The Company, through the Debt and Equity Activities SBU, primarily made debt investments directly, or through joint ventures, predominantly in real estate related assets and investments.

At December 31, 2005, the Company, on the liquidation basis of accounting, had the following investments in the Debt and Equity Activities SBU: (i) approximately $453,000 in Clairborne Fordham, a company initially organized to provide $34,000,000 of mezzanine construction financing for a high-rise condominium project in Chicago, which currently owns and is selling the remaining two unsold residential units; (ii) approximately $20,000,000 for Reis, a real estate information and database company; and (iii) approximately $666,000 in Wellsford Mantua, a company organized to purchase land parcels for rezoning, subdivision and creation of environmental mitigation credits.

Debt Investments

The following table presents information regarding the Company's debt investments, none of which were outstanding at December 31, 2005:

		Balance at December 31,				Annual Interest		Stated Maturity	Prepayment	Interest Revenue for the Years Ended December 31,
	Collateral	2005		2004		Rate		Date	Date	2005		2004		2003
Guggenheim								December	September
Loan	(A)	$	--	$	1,032,000		8.25%	2005	2005	$	58,000	$	173,000	$	259,000
277 Park									September
Loan	(B)	$	--	$	--		12.00%	May 2007	2003	$	--	$	--	$	6,643,000	(C)

(A)	The loan represented the balance of proceeds from a sale of a 4.2% interest in The Liberty Hampshire Company, L.L.C. ("Liberty Hampshire"). The loan was secured by partnership interests in Guggenheim.
(B)	Secured by a pledge of equity interests in the entity which owned an office property in midtown Manhattan, New York.
(C)	Includes a yield maintenance penalty of $4,368,000.

F-36

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

Equity Investments

Second Holding

Second Holding is a special purpose finance company, organized to purchase investment and non-investment grade rated real estate debt instruments and investment grade rated other asset-backed securities. The other asset-backed securities that Second Holding purchased may have been secured by, but not limited to, leases on aircraft, truck or car fleets, bank deposits, leases on equipment, fuel/oil receivables, consumer receivables, pools of corporate bonds and loans and sovereign debt. It was Second Holding's intent to hold all securities to maturity. Many of the securities owned by Second Holding were obtained through private placements.

The Company's initial net contribution to Second Holding was approximately $24,600,000 to obtain an approximate 51.09% non-controlling interest in Second Holding, with Liberty Hampshire owning 10% and an affiliate of a significant shareholder of the Company, the Hunt Trust, together with other Hunt Trust related entities, owning the remaining approximate 39% interest.

During the latter part of 2000, an additional partner was admitted to the venture who committed to provide credit enhancement. The parent company of this partner announced during 2003 that its subsidiary (the partner of Second Holding) would no longer write new credit enhancement business, however, it would continue to support its existing book of credit enhancement business. This partner was entitled to 35% of net income as defined by agreement, while the other partners, including the Company, shared in the remaining 65%. The Company's allocation of income was approximately 51.09% of the remaining 65%.

During the second quarter of 2004, the partner providing the credit enhancement requested that the management of Second Holding not purchase any further long-term investments and Second Holding accordingly suspended such acquisitions. During the third quarter of 2004, the partners evaluated alternatives available to Second Holding in addition to holding existing assets through respective maturities and then retiring related debt. As a consequence of not purchasing additional assets, operating income, fees earned and cash flows received by the Company from such fees declined during 2004.

In November 2004, the Company completed the sale of its interest in Second Holding for $15,000,000 in cash. Since the Company was willing to entertain and execute an agreement at this price, and based upon the evaluation of other alternatives, the Company determined it was appropriate, under the accounting literature for equity method investees, to record a $9,000,000 impairment charge to the carrying amount of its investment in Second Holding during the third quarter of 2004.

The Company accounted for its investment in Second Holding on the equity method of accounting as its interests were represented by two of eight board seats with one-quarter of the vote on any major business decisions. The Company's investment was approximately $29,167,000 at December 31, 2003. The Company's share of (loss) income from Second Holding's operations was approximately $(4,790,000) and $1,640,000 for the eleven months ended November 30, 2004 (date of sale) and for the year ended December 31, 2003. The loss in the year ended December 31, 2004 is the result of a

F-37

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

$12,930,000 net impairment charge taken by Second Holding (of which the Company's share was $6,606,000) related to the write-down of one of its investments during the first quarter of 2004, offset by a partial recovery when the investment was sold in the second quarter of 2004. The net fees earned by the Company, which were based upon total assets of Second Holding, amounted to approximately $751,000 and $930,000 for the years ended December 31, 2004 and 2003, respectively.

(amounts in thousands)	For the Years Ended December 31,
Condensed Operating Data	2004*			2003
Interest revenue	$	38,248		$	42,339
Interest expense		30,478			32,391
Loss on investments		18,784			--
Fees and other		4,433			4,905
Total expenses		53,695			37,296
Net (loss) income	$	(15,447	)	$	5,043

* The Company sold its investment in Second Holding on November 30, 2004.

Clairborne Fordham

In October 2000, the Company and Prudential Real Estate Investors ("PREI"), an affiliate of Prudential Life Insurance Company, organized Clairborne Fordham, a venture in which the Company has a 10% interest. The Company's investment in Clairborne Fordham, which is accounted for on the equity method, was approximately $453,000 (liquidation basis) and approximately $2,190,000 (going concern basis) at December 31, 2005 and 2004, respectively.

Upon its organization, Clairborne Fordham provided an aggregate of $34,000,000 of mezzanine construction financing (the "Mezzanine Loan") for the construction of Fordham Tower, a 50-story, 227 unit, luxury condominium apartment project to be built on Chicago's near northside ("Fordham Tower"). The Mezzanine Loan, which matured in October 2003, bore interest at a fixed rate of 10.50% per annum with provisions for additional interest to PREI and the Company and was secured by a lien on the equity interests of the owner of Fordham Tower. The Company could earn fees from PREI's additional interest based upon certain levels of returns on the project. Such additional interest had not been accrued by the Company or Clairborne Fordham through the maturity of the Mezzanine Loan, nor had any fees been accrued by the Company.

The Mezzanine Loan was not repaid at maturity and as of October 2003, an amended loan agreement was executed. The amended terms provided for extending the maturity to December 31, 2004, the placement of a first mortgage lien on the project, no interest to be accrued after September 30, 2003 and for the borrower to add to the existing principal amount the additional interest due Clairborne Fordham at September 30, 2003 of approximately $19,240,000. In lieu of interest after September 30, 2003, Clairborne Fordham was to participate in certain additional cash flows, as defined, if earned from net sales proceeds of the Fordham Tower project.

The amended loan agreement provided for a $3,000,000 additional capital contribution by the borrower and use of an existing cash collateral account to pay off an existing construction loan and any unpaid construction costs. Also, the amended loan agreement provided for an initial principal payment and all

F-38

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

proceeds after project costs to be first applied to payment in full of the loan and the additional interest to Clairborne Fordham before any sharing of project cash flow with the borrower. Payments of $5,125,000 and $7,823,000 were made to Clairborne Fordham during the fourth quarter of 2003 and for the period January 1, 2004 to September 15, 2004, respectively, of which the Company's share was $510,000 and $782,000, respectively.

On September 15, 2004, Clairborne Fordham executed an agreement with the owners of Fordham Tower pursuant to which Clairborne Fordham obtained title to the remaining unsold components of the project (which at that time included 18 unsold residential units, the 188 space parking garage and 12,000 square feet of retail space). Additionally, Clairborne Fordham agreed to distribute the first $2,000,000 of sale proceeds to the former owner. No gain or loss was recognized by Clairborne Fordham or the Company as a result of the transfer. During the period September 15, 2004 to December 31, 2004, Clairborne Fordham sold the retail space and three residential units and realized approximately $8,677,000 of net proceeds before the $2,000,000 payment to the former owner. Clairborne Fordham distributed approximately $5,655,000 to the venture members including approximately $566,000 to the Company during the period September 15, 2004 to December 31, 2004. Undistributed proceeds were retained by Clairborne Fordham for working capital purposes. During the year ended December 31, 2005, Clairborne Fordham sold the parking garage and 13 residential units for aggregate net proceeds of approximately $26,812,000, of which approximately $2,645,000 was distributed to the Company during 2005. Clairborne Fordham intends to continue the orderly sale of the remaining two residential units in 2006.

The following table details the Company's share of income from Clairborne Fordham:

	For the Period January 1 to November 17,		For the Years Ended December 31,
	2005		2004		2003
Contractual interest from Mezzanine Loan	$	--	$	--	$	269,000
Additional interest income pursuant to the October
2003 amended loan agreement		--		314,000		136,000
Net income from sales of components and operations
subsequent to the September 15, 2004 transaction		702,000		198,000		--
	$	702,000	$	512,000	$	405,000

Other Investments

Reis

The Company has direct and indirect equity investments in Reis, a real estate information and database company, which provides real estate market information to institutional investors. At December 31, 2005, the carrying amount of the Company's aggregate investment in Reis was approximately $20,000,000 (liquidation basis - see below). This investment represents approximately 21% of Reis' equity on an as converted basis at December 31, 2005. Such investment, which had previously been accounted for on a cost basis, amounted to approximately $6,790,000 at December 31, 2004 of which approximately $2,231,000 is held directly by the Company and approximately $4,559,000 represents our share held through Reis Capital. Prior to the approval of the Plan, the cost basis method was used to account for Reis as the Company's ownership interest is in non-voting preferred shares and the Company's interests are represented by one member of Reis' seven member board. The adjustment to report Reis at estimated net realizable value is reflected in the adjustment to net realizable value of $72,485,000 on the Consolidated Statement of Changes in Net Assets in Liquidation.

F-39

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

The president and primary common shareholder of Reis is the brother of Mr. Lynford, the Chairman, President and Chief Executive Officer of the Company. Mr. Lowenthal, the Company's former President and Chief Executive Officer, who currently serves on the Company's Board, has served on the board of directors of Reis since the third quarter of 2000. Messrs. Lynford and Lowenthal have and will continue to recuse themselves from any investment decisions made by the Company pertaining to Reis.

As of March 13, 2006, Reis is currently considering offers from potential purchasers ranging between $90,000,000 and $100,000,000 to acquire 100% of its stock. Based on these offers, in estimating the net realizable value for its investment in Reis, the Company utilized $90,000,000 of net proceeds in valuing Reis. If Reis is sold at that amount, the Company will receive approximately $20,000,000 of proceeds, subject to escrow holdbacks. While these potential sale proceeds are now reflected in the Company's net realizable value presentation, there is no assurance that this transaction will be consummated. There is no assurance that if this current transaction is not consummated that Reis will sell the company to another party at the same price or at all.

Value Property Trust

During 2004 and 2003, the Company sold the remaining properties acquired as part of the February 1998 merger with VLP. In July 2003, the Salem, New Hampshire property was sold for a net sales price of approximately $4,200,000 and the Company utilized $22,000 of an existing impairment reserve recorded in 2000. During April 2004, the Company sold the Philadelphia, Pennsylvania property for net proceeds of approximately $2,700,000. As a result of the sale of the Philadelphia, Pennsylvania property, the Company reversed approximately $625,000 of impairment reserves recorded in 2000. During June 2004, the Company recognized approximately $184,000 of proceeds which had been placed in escrow from the sale of the Salem, New Hampshire property, as a result of the expiration of a contingency period. The contingent proceeds and the reversal of the impairment reserve were reflected in income from discontinued operations during the second quarter of 2004 and the year ended December 31, 2004. These transactions were the completion of the sales process of the VLP properties owned by the Company.

Wellsford Mantua

During November 2003, the Company made an initial $330,000 investment in the form of a loan, in a company organized to purchase land parcels for rezoning, subdivision and creation of environmental mitigation credits. The loan is secured by a lien on a leasehold interest in a 154 acre parcel in West Deptford, New Jersey which includes at least 64.5 acres of wetlands and a maximum of 71 acres of developable land. The Company consolidates Wellsford Mantua at December 31, 2005 and 2004. The Company's investment in Wellsford Mantua was approximately $666,000 (liquidation basis) and approximately $533,000 (going concern basis) at December 31, 2005 and 2004, respectively.

Residential Activities

Palomino Park

The Company has been the developer and managing owner of Palomino Park, a five phase, 1,707 unit multifamily residential development in Highlands Ranch, a southern suburb of Denver, Colorado. Three phases (Blue Ridge, Red Canyon and Green River) aggregating 1,184 units were operated as rental property until they were sold in November 2005 (see below). The 264 unit Silver Mesa phase was converted into condominiums (sales commenced in February 2001 and by August 2005 the

F-40

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

Company had sold all 264 units). The Gold Peak phase is under construction as a 259 unit for-sale condominium project. At December 31, 2005, the Company had a 92.925% interest in the final phase of Palomino Park and a subsidiary of EQR owned the remaining 7.075% interest. At December 31, 2004, the Company's interest was 85.85% and EQR's interest was 14.15%.

With respect to EQR's 14.15% interest at December 31, 2004 in the corporation that owns Palomino Park, there existed a put/call option between the Company and EQR related to one-half of such interest (7.075%). In February 2005, the Company informed EQR of its intent to exercise this option at a purchase price of $2,087,000. This transaction was completed in October 2005. Aggregate distributions from the subsidiary corporation's available cash and sales proceeds of approximately $4,080,000 were made to EQR during 2005.

In November 2005, the Company sold the Blue Ridge, Red Canyon and Green River rental phases for $176,000,000 to a national financial services organization and realized a gain of approximately $57,202,000 after EQR's interest, specific bonuses paid to executives of the Company related to the sale and estimated state and Federal taxes. This amount is reflected in the adjustment to net realizable value of $72,485,000 on the Consolidated Statement of Changes in Net Assets in Liquidation. The Company repaid an aggregate of approximately $94,035,000 of mortgage debt and paid approximately $4,600,000 of debt prepayment costs from the sale proceeds, among other selling costs.

In December 1995, the Trust marketed and sold $14,755,000 of tax-exempt bonds to fund construction at Palomino Park. Initially, all five phases of Palomino Park were collateral for the Palomino Park Bonds. The Palomino Park Bonds had an outstanding balance of $12,680,000 at December 31, 2004 and were collateralized by four phases at Palomino Park. In January 2005, the Palomino Park Bonds were paid down by $2,275,000 in order to release the Gold Peak phase from the bond collateral. A five-year letter of credit from Commerzbank AG had secured the Palomino Park Bonds and a subsidiary of EQR had guaranteed Commerzbank AG's letter of credit. The Company retired the $10,405,000 balance of this obligation prior to the expiration of the letter of credit and EQR's guarantee in May 2005.

In December 1997, Phase I, the 456 unit phase known as Blue Ridge, was completed at a cost of approximately $41,600,000. At that time, the Company obtained a $34,500,000 permanent loan (the "Blue Ridge Mortgage") secured by a first mortgage on Blue Ridge. The Blue Ridge Mortgage had a maturity of December 2007 and bore interest at a fixed rate of 6.92% per annum. Principal payments were based on a 30-year amortization schedule.

In November 1998, Phase II, the 304 unit phase known as Red Canyon, was completed at a cost of approximately $33,900,000. At that time, the Company acquired the Red Canyon improvements and the related construction loan was repaid with the proceeds of a $27,000,000 permanent loan (the "Red Canyon Mortgage") secured by a first mortgage on Red Canyon. The Red Canyon Mortgage had a maturity of December 2008 and bore interest at a fixed rate of 6.68% per annum. Principal payments were based on a 30-year amortization schedule.

In October 2000, Phase III, the 264 unit phase known as Silver Mesa, was completed at a cost of approximately $44,200,000. The Company made the strategic decision to convert Silver Mesa into condominium units and sell them to individual buyers. In conjunction with this decision, the Company prepared certain units to be sold and continued to rent certain of the remaining unsold units during the sell out period until the inventory available for sale had been significantly reduced and additional units were required to be prepared for sale. The Company made a payment of $2,075,000 to reduce the

F-41

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

outstanding balance on the tax-exempt bonds in order to obtain the release of the Silver Mesa phase from the Palomino Park Bond collateral and obtained a $32,000,000 loan which was collateralized by the unsold Silver Mesa units and matured in December 2003 (the "Silver Mesa Conversion Loan"). During May 2003, the Company repaid the remaining unpaid principal balance of the Silver Mesa Conversion Loan with proceeds from Silver Mesa unit sales and available cash.

Sales of condominium units at the Silver Mesa phase of Palomino Park commenced in February 2001 and by August 2005 all of the 264 units were sold. The following table provides information regarding sales of Silver Mesa units:

	For the Years Ended December 31,										Project
	2005		2004		2003		2002		2001		Totals
Number of units sold		2		53		56		48		105		264
Gross proceeds	$	488,000	$	12,288,000	$	12,535,000	$	10,635,000	$	21,932,000	$	57,878,000
Principal paydown on Silver
Mesa Conversion Loan	$	--	$	--	$	4,318,000	$	9,034,000	$	18,648,000	$	32,000,000

As the Company sold Silver Mesa units, rental revenue, the corresponding operating expenses and cash flow from the units being rented diminished. Rental revenue from the Silver Mesa phase was approximately $51,000 and $702,000 for the years ended December 31, 2004 and 2003, respectively.

In December 2001, Phase IV, the 424 unit phase known as Green River, was completed at a cost of approximately $56,300,000. In February 2003, the Company obtained a $40,000,000 permanent loan secured by a first mortgage on Green River (the "Green River Mortgage"). The Green River Mortgage had a maturity of March 2013 and bore interest at a fixed rate of 5.45% per annum. Principal payments were based on a 30-year amortization schedule. The proceeds of the Green River Mortgage were used to repay the construction loan for the Green River phase.

In 2004, the Company commenced the development of the final phase of Palomino Park known as Gold Peak. Gold Peak will be comprised of 259 condominium units to be built in three sections on the remaining 29 acre land parcel at Palomino Park. At December 31, 2005, there were 84 Gold Peak units under contract with nominal down payments. Gold Peak unit sales commenced in January 2006.

In April 2005, the Company obtained development and construction financing for Gold Peak in the aggregate amount of approximately $28,800,000, which bears interest at LIBOR + 1.65% per annum and mature in November 2006 with respect to the development loan and in November 2009 with respect to the construction loan, both of which have additional extension options upon satisfaction of certain conditions being met by the borrower. The balance of the Gold Peak Mortgage was approximately $11,575,000 at December 31, 2005. Principal repayments will be made as units are sold. The Company has purchased a 5% LIBOR cap expiring in June 2008 for this loan.

Other Developments

East Lyme

The Company has a 95% ownership interest as managing member of a venture which owns 101 single family home lots situated on 139 acres of land in East Lyme, Connecticut upon which it is constructing

F-42

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

houses for sale ("East Lyme"). The Company purchased the land for $6,200,000 in June 2004. During the fourth quarter of 2005, the model home was completed. The completion of additional homes and closings of initial sales are expected to occur in 2006.

After purchasing the land, the Company executed an agreement with a homebuilder (the "Homebuilder") who will construct and sell the homes for this project and is a 5% partner in the project along with receiving other consideration. The Company extended a loan to the Homebuilder of $157,500 at a rate of 6% per annum which was used by the Homebuilder to finance one-half of his 5% investment in East Lyme. The loan matures upon the termination of the development agreement.

The Company obtained construction financing in the aggregate amount of $21,177,000 (to be drawn upon as costs are expended), which bears interest at LIBOR + 2.15% per annum and matures in December 2007 with two one-year extensions at the Company's option upon satisfaction of certain conditions being met by the borrower. The balance of the East Lyme Construction Loan was approximately $7,226,000 and $361,000 at December 31, 2005 and 2004, respectively. The Company has purchased a 4% LIBOR cap expiring July 2007 for this loan.

The Company executed an option to purchase from the seller of the initial East Lyme land parcel a contiguous parcel of land which can be used to develop 60 single family homes and subsequently acquired the parcel in November 2005 for $3,720,000, including future costs which were the obligation of the seller. The East Lyme Land requires remediation of pesticides used on the property when it was an apple orchard, the cost of which has been considered in evaluating the carrying amount of the property at December 31, 2005.

Claverack

The Company has a 75% ownership interest in a joint venture that owns two land parcels aggregating approximately 300 acres in Claverack, New York. The Company acquired its interest in the joint venture for $2,250,000 in November 2004. One land parcel is subdivided into seven single family home lots on approximately 65 acres upon which Claverack intends to build and sell custom designed homes. The remaining 235 acres, known as The Stewardship, are currently subdivided into six single family home lots with the intent to obtain an increase in the number of developable residential lots to 49 lots, improve the land, obtain construction financing and construct and sell single family homes. The completion of initial homes and closings of initial sales are expected to occur in 2007.

Claverack is capitalized with $3,000,000 of capital, the Company's share of which was contributed in cash and the 25% partner's contribution was the land, subject to liabilities, at a net value of $750,000. The land was subject to a $484,000 mortgage which was assumed by the joint venture (the balance of this mortgage was $465,000 at December 31, 2004, bore interest at a rate of 7% per annum and had a maturity of February 2010). At the closing, an aggregate of approximately $866,000 owed to affiliates of the 25% partner was paid from the amount contributed by the Company.

In December 2005, Claverack obtained a line of credit construction loan in the aggregate amount of $2,000,000 which was used to retire the Claverack Mortgage and will be used to construct a custom design model home during 2006 until permanent construction financing is obtained. The Claverack Construction Loan bears interest at LIBOR + 2.20% per annum and matures in December 2006 with a six month extension at the Company's option upon satisfaction of certain conditions being met by the borrower. The balance of the Claverack Construction Loan was approximately $449,000 at December 31, 2005.

F-43

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

Segment Information (continued)

On January 13, 2006, the Claverack partners contributed additional capital aggregating approximately $701,000, of which the Company's share was approximately $526,000.

Beekman

In February 2005, the Company acquired a 10 acre parcel in Beekman, New York for a purchase price of $650,000. The Company also entered into a contract to acquire a contiguous 14 acre parcel, the acquisition of which was conditioned upon site plan approval to build a minimum of 60 residential condominium units. The Company's $300,000 deposit in connection with this contract was secured by a first mortgage lien on the property.

As a result of various uncertainties including that the governmental approval and development processes may take an indeterminate period and extend beyond December 31, 2008, the Board authorized the sale of the Beekman interests to the Company's Chairman and former President, or a company in which they have ownership interests, at the greater of the Company's costs or appraised values. On January 27, 2006, a company which is owned by Messrs. Lynford and Lowenthal, the principal of the Company's joint venture partner in the East Lyme project and others acquired the Beekman project at the Company's aggregate cost of approximately $1,297,000. This was accomplished through a sale of the entities that owned the Beekman project.

F-44

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

12. Fair Value of Financial Instruments

At December 31, 2005, the Company's assets are stated at their net realizable values and liabilities are stated at their estimated settlement amounts. All of the Company's debt at December 31, 2005 is floating rate based. The Company has two interest rate caps which had a fair value of approximately $168,000 at December 31, 2005. The following table presents the historical cost and fair value of the Company's consolidated financial instruments at December 31, 2004:

(amounts in thousands)
Investments	Historical Cost at December 31, 2004		Fair Value at December 31, 2004
Fixed rate U.S. Government treasury obligations	$	27,551	$	27,424	(B)
Notes Receivable
Fixed rate:
Guggenheim	$	1,032	$	1,052	(C)
Other		158		158
Total notes receivable	$	1,190	$	1,210
Debt (A)
Floating rate:
Palomino Park Bonds	$	12,680	$	12,680	(D)
East Lyme Construction Loan		361		361	(D)
Total floating rate debt		13,041		13,041
Fixed rate:
Blue Ridge Mortgage		31,407		33,466	(E)
Red Canyon Mortgage		24,885		26,587	(E)
Green River Mortgage		39,055		39,742	(E)
Claverack Mortgage		465		470	(E)
Total fixed rate debt		95,812		100,265
Total debt	$	108,853	$	113,306

(A)	For more information regarding the Company's debt, see Footnote 4.
(B)	Based upon quoted market value of such securities at December 31, 2004.
(C)	The fair value of the Company's fixed rate notes receivable was determined by reference to comparable investment market data.
(D)	The fair value of the Company's floating rate debt is considered to be its carrying amounts.
(E)	The fair value of the Company's fixed rate debt was determined by reference to comparable investment market data.

F-45

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)

13. Summarized Consolidated Quarterly Information (Unaudited)

Summarized consolidated quarterly financial information is as follows:

	For the Three Months Ended									For the Period October 1 to
2005	March 31			June 30			September 30			November 17
Revenues	$	4,301,505		$	4,037,315		$	4,231,164		$	2,140,491
Costs and expenses		(6,573,151	)		(7,506,813	)		(6,088,942	)		(3,454,186	)
(Loss) income from joint ventures		(490,353	)		6,403,376			5,601,729			334,981
Minority interest benefit		31,037			35,244			42,802			63,093
(Loss) income before income taxes		(2,730,962	)		2,969,122			3,786,753			(915,621	)
Income tax (expense)		(60,000	)		--			(10,000	)		(21,000	)
Net (loss) income	$	(2,790,962	)	$	2,969,122		$	3,776,753		$	(936,621	)
Per share amounts, basic and diluted:*
Net (loss) income	$	(0.43	)	$	0.46		$	0.58		$	(0.14	)
Weighted average number of common shares
outstanding:
Basic		6,467,639			6,467,639			6,467,639			6,467,639
Diluted		6,467,639			6,468,509			6,476,698			6,467,639
	For the Three Months Ended
2004	March 31			June 30			September 30			December 31
Revenues	$	6,166,734		$	8,540,073		$	8,253,519		$	4,689,000
Costs and expenses		(8,580,372	)		(10,574,028	)		(10,606,246	)		(7,820,563	)
(Loss) from joint ventures		(5,091,593	)		(1,014,438	)		(10,277,532	)		(7,331,551	)
Minority interest benefit (expense)		39,485			4,362			(3,665	)		48,296
(Loss) before income taxes, and discontinued
operations		(7,465,746	)		(3,044,031	)		(12,633,924	)		(10,414,818	)
Income tax (expense) benefit		(40,000	)		(59,000	)		(44,000	)		273,000
(Loss) from continuing operations		(7,505,746	)		(3,103,031	)		(12,677,924	)		(10,141,818	)
(Loss) income from discontinued operations, net of tax		(13,147	)		789,461			--			(51,245	)
Net (loss)	$	(7,518,893	)	$	(2,313,570	)	$	(12,677,924	)	$	(10,193,063	)
Per share amounts, basic and diluted:*
(Loss) from continuing operations	$	(1.16	)	$	(0.48	)	$	(1.96	)	$	(1.57	)
Income (loss) from discontinued operations		--			0.12			--			(0.01	)
Net (loss)	$	(1.16	)	$	(0.36	)	$	(1.96	)	$	(1.58	)
Weighted average number of common shares
outstanding:
Basic and diluted		6,457,531			6,459,738			6,460,770			6,463,054

* Aggregate quarterly earnings per share amounts may not equal annual or period to date amounts presented elsewhere in these consolidated financial statements due to rounding differences.

F-46

Wellsford/Whitehall Group, L.L.C. and Subsidiaries

Consolidated Financial Statements

Years ended December 31, 2005 and 2004
with Report of Independent Auditors

F-47

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS

	Page No.
Report of Independent Auditors	F-49
Consolidated Balance Sheets	F-50
Consolidated Statements of Operations	F-51
Consolidated Statements of Members' Equity	F-52
Consolidated Statements of Cash Flows	F-53
Notes to Consolidated Financial Statements	F-54

F-48

REPORT OF INDEPENDENT AUDITORS

To the Members of
Wellsford/Whitehall Group, L.L.C. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Wellsford/Whitehall Group, L.L.C. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, changes in members’ equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wellsford/Whitehall Group, L.L.C. and subsidiaries at December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

Dallas, Texas
January 31, 2006

F-49

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	December 31,
	2005			2004
ASSETS
Real estate assets:
Land	$	1,166,250		$	1,166,250
Land improvements		3,170,580			3,608,757
Buildings and improvements		6,952,763			6,897,437
		11,289,593			11,672,444
Less accumulated depreciation		(2,612,576	)		(1,987,244	)
		8,677,017			9,685,200
Assets held for sale		--			138,809,453
Cash and cash equivalents		1,444,452			2,280,434
Restricted cash		--			9,729,738
Deferred costs, less accumulated amortization		--			780,385
Receivables, prepaids and other assets, net		306,661			1,083,189
Total assets	$	10,428,130		$	162,368,399
LIABILITIES AND MEMBERS' EQUITY
Liabilities:
Notes payable	$	--		$	113,887,418
Liabilities attributable to assets held for sale		--			15,880,361
Accrued expenses and other liabilities		1,251,775			3,297,833
Accrued interest on notes payable		--			537,282
Total liabilities		1,251,775			133,602,894
Commitments and contingencies
Members' equity		9,176,355			28,765,505
Total liabilities and members' equity	$	10,428,130		$	162,368,399

F-50

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2005			2004			2003
Revenues:
Rental income	$	1,046,654		$	1,041,553		$	1,111,723
Recoverable expenses		122,748			128,500			114,031
Interest and other income		411,130			465,434			263,722
Total revenues		1,580,532			1,635,487			1,489,476
Expenses:
Property operations		569,151			461,803			569,211
Real estate taxes		187,484			230,304			192,217
Insurance		30,721			45,139			42,352
Interest		380,617			337,957			351,464
Fair value adjustment of derivative instrument		8,889			259,731			--
Depreciation and amortization		625,332			668,328			634,725
Asset management fees		112,483			112,483			112,491
Ownership		43,486			194,758			328,929
Loss from impairment		452,500			3,305,985			--
Total expenses		2,410,663			5,616,488			2,231,389
Loss before discontinued operations		(830,131	)		(3,981,001	)		(741,913	)
Discontinued Operations:
Gain on dispositions		17,325,536			886,651			9,297,121
Operating income		28,708			2,385,882			9,842,592
Interest and amortization		(2,218,532	)		(11,674,228	)		(15,626,814	)
Loss from impairment		--			(17,763,511	)		(114,687,022	)
Income (loss) from discontinued operations		15,135,712			(26,165,206	)		(111,174,123	)
Net income (loss)	$	14,305,581		$	(30,146,207	)	$	(111,916,036	)

F-51

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY

	Membership						Paid-In			Excess of Distributions Over			Other Comprehensive			Total Members'
	Units			Amount			Capital			Earnings			(loss)/income			Equity
January 1, 2003		19,258,328		$	192,583		$	275,657,412		$	(96,108,482	)	$	(1,296,573	)	$	178,444,940
Net loss		--			--			--			(111,916,036	)		--			(111,916,036	)
Other comprehensive income		--			--			--			--			1,102,893			1,102,893
Distributions		--			--			--			(2,264,826	)		--			(2,264,826	)
December 31, 2003		19,258,328			192,583			275,657,412			(210,289,344	)		(193,680	)		65,366,971
Net loss		--			--			--			(30,146,207	)		--			(30,146,207	)
Other comprehensive income		--			--			--			--			193,680			193,680
Redemption of Saracen Members' Interest		(1,434,126	)		(1,434	)		(6,647,505	)		--			--			(6,648,939	)
December 31, 2004		17,824,202			191,149			269,009,907			(240,435,551	)		--			28,765,505
Net income		--			--			--			14,305,581			--			14,305,581
Distributions		--			--			--			(25,500,000	)		--			(25,500,000	)
Redemption of WCPT Members' Interest		(6,276,780	)		(6,277	)		(8,388,454	)		--			--			(8,394,731	)
December 31, 2005		11,547,422		$	184,872		$	260,621,453		$	(251,629,970	)	$	--		$	9,176,355

F-52

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2005			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	14,305,581		$	(30,146,207	)	$	(111,916,036	)
Adjustments from net income (loss) to net cash
from operating activities:
Gain on disposition of real estate assets		(17,325,536	)		(886,651	)		(9,297,121	)
Loss on derivative fair market value adjustment		8,889			259,731			--
Depreciation and amortization		625,332			8,147,492			11,200,304
Loss on impairment of real estate assets		452,500			21,069,496			114,687,022
Amortization of deferred financing costs		771,496			1,298,036			4,964,321
Change in receivables, prepaids and other assets		3,053,353			(1,466,571	)		3,431,762
Change in accrued expenses and other liabilities		(2,519,495	)		(4,667,969	)		690,090
Net cash (used in) provided by operating activities		(627,880	)		(6,392,643	)		13,760,342
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to real estate assets		(704,678	)		(8,668,305	)		(23,807,946	)
Disposal of real estate assets, net of selling expenses		154,365,392			17,182,058			170,509,950
Net cash provided by investing activities		153,660,714			8,513,753			146,702,004
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		--			7,925,001			--
Repayment of notes payable		(129,703,823	)		(15,705,781	)		(166,700,076	)
Repayment of ground lease obligations		--			--			(1,111,239	)
Change in restricted cash		9,729,738			(2,350,373	)		4,641,803
Deferred financing costs		--			(1,316,829	)		(83,543	)
Member distributions		(25,500,000	)		--			(2,264,826	)
Redemption of equity		(8,394,731	)		--			--
Net cash used in financing activities		(153,868,816	)		(11,447,982	)		(165,517,881	)
Net change in cash and cash equivalents		(835,982	)		(9,326,872	)		(5,055,535	)
Cash and cash equivalents, beginning of year		2,280,434			11,607,306			16,662,841
Cash and cash equivalents, end of year	$	1,444,452		$	2,280,434		$	11,607,306
SUPPLEMENTAL INFORMATION:
Cash paid for interest	$	1,678,891		$	10,886,159		$	12,369,290

F-53

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004

1.	Organization and Business
	Wellsford/Whitehall Group, L.L.C. and subsidiaries (the “Company”), was formed in May 1999 and consisted of the following members at December 31, 2005: WHWEL Real Estate Limited Partnership (“WHWEL”), WXI/WWG Realty L.L.C. and W/W Group Holdings, L.L.C. (collectively the “Whitehall Members”). These are collectively referred to as the “Members.”

WP Commercial, L.L.C. (“WP”) manages the Company on a day-to-day basis; however, certain major and operational decisions require the consent of the Members. WP also provides management, construction, development and leasing services to the Company as well as to third parties, based upon an agreed upon fee schedule and also provides such services to a new venture organized by certain of the Whitehall Members (“New Venture”). WP is owned by affiliates of the Whitehall Members.

Under the terms of existing agreements, it is expected that the Company will not purchase any additional real estate assets. The Members have agreed to an orderly disposal of the Company’s assets over time. The Company will terminate on December 31, 2045, unless sooner by the written consent of all Members.

During 2005, the Company redeemed and retired the 6,276,780 membership units owned by the Wellsford Commercial Properties Trust (“WCPT”), in exchange for cash of $8,394,731. The cash payment was the negotiated fair market value of the WCPT members’ interest as of July 31, 2005 and was paid by the Company to the WCPT members’.

During 2004, the Company redeemed and retired the 1,434,126 membership units owned by the Saracen Members in exchange for transferring title to the six properties encumbered by the Nomura Loan, one unencumbered land asset and all other assets and liabilities related to the transferred properties to the Saracen Members. The Saracen Members also assumed the Nomura Loan and all accrued interest associated with the loan. The redemption and retirement of the Saracen Members’ membership units also resulted in the nullification of the contingent tax indemnities the Company was previously obligated to maintain.

The number of membership units issued and outstanding is as follows:

	December 31,
	2005		2004		2003
Whitehall Members		11,547,422		11,547,422		11,547,422
WCPT		--		6,276,780		6,276,780
Saracen Members		--		--		1,434,126
Total		11,547,422		17,824,202		19,258,328

As of December 31, 2005, the Company owned 2 properties, containing approximately 129,227 square feet (unaudited) of office space in New Jersey (1 operating property, 1 tract of land).

2. Summary Of Significant Accounting Policies

Principles of Consolidation. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

F-54

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(continued)

Summary Of Significant Accounting Policies (continued)

Cash and Cash Equivalents. The Company considers all demand and money market accounts and short-term investments in government funds with an original maturity of three months or less when purchased to be cash and cash equivalents.

Real Estate and Depreciation. Real estate assets are stated at cost, adjusted for impairment losses. Costs directly related to the acquisition and improvement of real estate are capitalized, including the purchase price, legal fees, acquisition costs, interest, property taxes and other operational costs during the period of development. Ordinary repairs and maintenance items are expensed as incurred. Replacements and betterments are capitalized and depreciated over their estimated useful lives. Tenant improvements and leasing commissions are capitalized and amortized over an average term of the related leases. Depreciation is computed over the expected useful lives of the depreciable properties using methods that approximate straight-line, principally 40 years for commercial properties, five to 12 years for furnishings and equipment and 15 years for land improvements.

Management reviews its real estate assets for impairment annually in connection with the preparation of budgets for the upcoming year and as part of the financial statement closing process. The Company performs evaluations for impairment on all of its real estate assets. As part of this evaluation, the Company recorded impairment provisions of approximately $453,000, $21,069,000 and $114,687,000 during the years ended December 31, 2005, 2004, and 2003, respectively. The 2005 provisions are primarily the result of a minor change in the economics of such asset and the market in which it is located. The 2004 provisions are primarily the result of a change in the intended use of such assets resulting from the change in classification from held for use to held for sale during the year ended December 31, 2004. The 2003 provisions were the result of significant declines in the economics of such assets and the markets in which they were located, resulting in decreasing market rents, slower absorption trends and greater tenant concession costs. For real estate assets held and used, the Company recognizes an impairment loss only if the carrying amount of the asset is not recoverable from its undiscounted cash flows and measures an impairment loss as the difference between the carrying amount and the fair value of the asset. Real estate assets considered held for sale are reported at the lower of carrying amount or fair value less costs to sell and are not depreciated.

Deferred Costs. Deferred costs consisted primarily of costs incurred to obtain financing. Those deferred financing costs were amortized over the expected term of the respective agreements, adjusted for any unscheduled prepayments. Such amortization is included in interest expense in the accompanying consolidated statements of operations. The Company recorded amortization expense related to deferred costs totaling $771,000, $1,298,000, and $4,964,000 during the years ended December 31, 2005, 2004, and 2003, respectively.

Profit and Revenue Recognition. Sales of real estate assets are recognized at closing, subject to the receipt of an adequate down payment and the relinquishment of substantial ownership risks in the future operations of the asset. Commercial properties are leased under operating leases. Rental revenue is recognized on a straight-line basis over the terms of the respective leases. The Company records an allowance for accounts receivable estimated to be uncollectible. As of December 31, 2005, the Company’s outstanding accounts receivable was $17,000, net of a $628,000 allowance.

Discontinued Operations. Properties planned to be sold within one year following the balance sheet date are classified as held for sale and the related results of operations have been reported separately as discontinued operations for the years ended December 31, 2005, 2004 and 2003. There were no properties held for sale at December 31, 2005. Assets attributable to properties held for sale have been classified separately in the Company’s balance sheets at December 31, 2004. The results of operations for assets disposed of during the current year have also been reported as discontinued operations for the years ended December 31, 2005, 2004 and 2003.

Income Taxes. The Company is a limited liability company. In accordance with the tax law regarding such entities, each of the Company’s membership unit holders is responsible for reporting their share of the Company’s taxable income or loss on their separate tax returns. Accordingly, the Company has recorded no provision for Federal, state and local income taxes.

F-55

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(continued)

Summary Of Significant Accounting Policies (continued)

Derivative and Hedging Activities. The Company recognizes all newly acquired derivatives on the balance sheet at fair value. During 2005, the interest rate protection agreement acquired in 2004 expired and the change in the fair value of the derivative is recognized in earnings.

During 2004, the Company acquired a new interest rate protection agreement which limited the base rate of the variable rate debt. The Company did not account for the derivative as a hedging instrument. Accordingly, changes in the fair value of the derivative were immediately recognized in earnings.

At December 31, 2003, the Company owned an interest rate protection agreement which limited the base rate of variable rate debt. Through the maturity date of the derivative, the ineffective portion of the derivative’s change in fair value was immediately recognized in earnings, as applicable. The effective portion of the fair value difference of the derivative was reflected separately in members’ equity as other comprehensive income or loss. At December 31, 2003, approximately $194,000 of accumulated other comprehensive loss remained in members’ equity, which was fully amortized during 2004.

Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3.	Commercial Properties
	The Company owns the following properties classified as held for investment. Amounts are presented net of impairment provisions (amounts in thousands):

			December 31,
Property Collateralizing Portfolio Loan-2004	Location		2005			2004
150 Mount Bethel		Warren, NJ	$	8,119		$	8,063
Unencumbered Property
Airport Executive Park-Land		Hanover Twp, NJ		3,171			3,609
Real estate held for investment				11,290			11,672
Accumulated depreciation				(2,613	)		(1,987	)
Real estate held for investment, net			$	8,677		$	9,685

One tenant of the properties held for investment contributed approximately 97% of rental income generated by properties held for investment for the year ended December 31, 2005.

The Company owned the following properties classified as held for sale as of December 31, 2004. As of December 31, 2005, all assets owned by the Company were held for investment. Amounts are presented net of impairment provisions (amounts in thousands):

F-56

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(continued)

Commercial Properties (continued)

		December 31,
Properties Collateralizing Portfolio Loan	Location	2005		2004
300 Atrium Drive(a)	Somerset, NJ		--	$	11,087
400 Atrium Drive(a)	Somerset, NJ		--		34,865
500 Atrium Drive(a)	Somerset, NJ		--		12,740
700 Atrium Drive(a)	Somerset, NJ		--		10,104
Garden State Exhibit Center(a)	Somerset, NJ		--		7,281
Cutler Lake Corporate Center(b)	Needham, MA		--		39,425
377/379 Campus Drive(a)	Franklin Twp, NJ		--		11,694
Samsung/105 Challenger Road(c)	Ridgefield Park, NJ		--		24,571
			--		151,767
Properties Collateralizing Other Mortgages or Unencumbered		2005		2004
600 Atrium Drive (land)(a)	Somerset, NJ		--		--
Airport Executive Park(a)	Hanover Twp, NJ		--		8,854
CVS(a)	Essex, MD		--		4,724
CVS(a)	Pennsauken, NJ		--		3,908
CVS(a)	Runnemede, NJ		--		4,121
CVS(a)	Wetumpka, AL		--		2,665
CVS(a)	Richmond, VA		--		3,162
			--		27,434
Real estate held for sale			--		179,201
Accumulated depreciation			--		(42,797	)
Real estate held for sale, net			--	$	136,404

(a) Asset sold during January 2005. (b) Asset sold during April 2005. (c) Asset sold during May 2005. The Company capitalizes interest related to properties under renovation to the extent such assets qualify for capitalization. Total interest capitalized was $0, $0 and $2,763,000, respectively, for the years ended December 31, 2005, 2004, and 2003.

4.

Leases Office space in the properties is generally leased to tenants under lease terms which provide for the tenants to pay base rents plus increases in operating expenses in excess of specified amounts. Non-cancelable operating leases with tenants expire on various dates through 2012. The future minimum lease payments to be received under leases existing as of December 31, 2005, are as follows (amounts in thousands):

For the Years Ended December 31,	Property held for investment
2006	$	1,227
2007		1,288
2008		345
2009		31
2010		31
Thereafter		44
Total	$	2,966

F-57

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(continued)

	The future minimum lease payments do not include specified payments for tenant reimbursements of operating expenses.
5.	Ground Leases The leasehold interest in one property held for investment is subject to a ground lease. At December 31, 2005, aggregate future minimum rental payments under the lease which expires on April 20, 2077, are as follows (amounts in thousands):

For the Years Ended December 31,	Property held for investment
2006	$	73
2007		75
2008		76
2009		77
2010		78
Thereafter		7,990
Total	$	8,369

6. Notes Payable

The Company’s notes payable consisted of the following (amounts in thousands):

	Interest Rate at		December 31,
Debt	December 31, 2004		2005		2004
General Electric Capital Real Estate (a)		LIBOR + 3.25%	$	--	$	106,078
Other Mortgage Loans
Washington Mutual (a)		LIBOR + 2.50%		--		7,809
Wells Fargo (b)		7.28%		--		15,816
Total notes payable				--		129,703
Notes payable assumed by purchaser				--		(15,816	)
Total notes payable, net of notes payable assumed			$	--	$	113,887

(a)	The Company repaid the Portfolio Loan and the Washington Mutual debt in full during 2005 with the sale of the assets.
(b)	The Wells Fargo note was assumed as part of the sale of certain assets during January 2005.

In June 2001, the Company obtained a loan with General Electric Capital Real Estate (the "Portfolio Loan") which required monthly payments of interest until maturity. During 2005, the loan was repaid in full with the sale of the assets.

The 30-day LIBOR rate was 2.40% on December 31, 2004.

In April 2004, the Company entered into a new interest rate protection agreement (the "New Cap") at a cost of $269,000, which limits LIBOR exposure to 6.86% until December 2006 on $122,100,000 of debt. The New Cap was not designated as a hedge. Accordingly, changes in the fair value of the New Cap were recognized immediately into earnings during the year ended December 31, 2005. At December 31, 2005, the fair value of the New Cap was $0.

In July 2001, the Company entered into an interest rate protection agreement (the "Cap") at a cost of $1,780,000, which limited LIBOR exposure to 5.83% until June 2003 and 6.83% until it matured in June 2004 on $285,000,000 of debt. The effective portion of the Cap's change in fair value was recorded as an adjustment to accumulated other comprehensive (income)/loss during 2004 and 2003, which totaled ($194,000) and ($1,103,000), respectively. An affiliate of the Whitehall Members was the counterparty to the Cap.

F-58

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(continued)

7. Transactions with Affiliates

As discussed in Note 1, WP performs management services for the Company. The Company pays WP an administrative cost and expense management fee equal to 0.93% of an agreed upon initial aggregate asset value of the Company's real estate assets. The fee will be reduced six months after any asset is sold pursuant to an agreed upon formula. The Company incurred an aggregate of $1,834,000, $3,715,000 and $4,604,000 in 2005, 2004 and 2003, respectively, related to these fees.

The Company also pays WP for construction management, development and leasing based upon a schedule of rates in each geographic area in which the Company operates. The Company incurred an aggregate of $75,000, $784,000 and $1,925,000 in 2005, 2004 and 2003, respectively, related to these services. These amounts have been capitalized as part of real estate assets.

Affiliates of the Whitehall Members provide debt placement, environmental and insurance services for the Company. The Company incurred $757,000, $459,000 and $691,000 in 2005, 2004 and 2003, respectively, for these services.

Affiliates of the Saracen Members performed property management services for certain assets of the Company through the date of the redemption, which amounted to approximately $161,000 and $252,000, respectively, for the years ended December 31, 2004 and 2003. Pursuant to an asset management agreement that was terminated in 1999, the Company agreed to pay the Saracen Members $1,000,000 in January 2004, plus quarterly interest at 10% per annum paid currently. This liability was fully satisfied during January 2004.

Affiliates of the Saracen Members leased space at one building through the date of the redemption to the Saracen Members. Revenue related to these leases for the years ended December 31, 2004 and 2003, totaled $18,000 and $49,000, respectively.

At December 31, 2005 and 2004 the Company had approximately $779,000 and $342,000, respectively, payable to its Members or their affiliates. These amounts are included in accrued expenses and other liabilities on the accompanying balance sheets.

During 2004, the Company transferred approximately $76,656,000 in assets and approximately $65,701,000 in liabilities to the Saracen Members. The transfer of the assets and liabilities was accounted for as a non-monetary exchange. Accordingly, the assets and liabilities were adjusted to fair value as of the date of transfer resulting in a $4,306,000 loss. This loss was recorded in discontinued operations in the accompanying statement of operations.

See Notes 1, 6 and 8 for additional related party interest information.

F-59

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(continued)

8. Discontinued Operations

As of December 31, 2004, the Company had 15 properties totaling 1,644,000 square feet (unaudited), which were classified as held for sale. There were no properties held for sale at December 31, 2005. Consistent with SFAS No. 144, the results of operations of the properties held for sale were reported as discontinued operations for the year ended December 31, 2004. Assets and liabilities anticipated to be sold that are attributable to the properties held for sale were classified separately in the Company's balance sheets, and are summarized as follows (amounts in thousands):

	December 31,
ASSETS	2005		2004
Net real estate	$	--	$	136,404
Receivables, prepaid and other assets		--		2,405
Total assets held for sale	$	--	$	138,809
LIABILITIES
Notes payable	$	--	$	15,816
Accrued interest on notes payable		--		64
Total liabilities held for sale	$	--	$	15,880

In conjunction with the sale of the properties classified as held for sale at December 31, 2004, the Company was required to pay off the notes payable related to certain of the properties.

Revenues attributable to the properties held for sale as of December 31, 2004 or attributable to the properties sold during the years ended December 31, 2005, 2004 and 2003 were $3,738,000, $30,604,000 and $46,709,000, respectively. Interest expense and amortization of deferred financing costs attributable to the properties held for sale as of December 31, 2004 or attributable to the properties sold during the years ended December 31, 2005, 2004 and 2003 were $2,219,000, $11,674,000 and $15,627,000, respectively.

The Company sold the following properties ($ in thousands):

	Years Ended December 31,
	2005		2004		2003
Number of properties		15		1		11
Net sales proceeds	$	154,365	$	17,182	$	170,510
Gain on sales	$	17,326	$	5,193	$	9,297

The transfer of the six properties encumbered by the Nomura Loan to the Saracen Members was treated as a non-monetary exchange. Accordingly, a loss was recognized in the financial statements during 2004 in the amount of $4,306,000, representing the difference between the book value and the fair value of the assets and liabilities on the date of transfer.

9.

Fair Value of Financial Instruments The Company's financial instruments consist of cash and cash equivalents, interest rate protection agreements and notes payable. The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of this item. The fair values of the interest rate derivative instruments are the amount at which they could be settled, based on estimates obtained from the third parties. The carrying values for certain notes payable approximate fair values because such debt consists of variable rate debt that reprices frequently.

F-60

WELLSFORD/WHITEHALL GROUP, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
(continued)

10. Commitments and Contingencies

From time to time, legal actions are brought against the Company in the ordinary course of business. Although there can be no assurance, the Company is not a party to any legal action that would have a material adverse effect on the Company's financial condition, results of operations or cash flows in the future.

In connection with the redemption of the WCPT members' interest, if the Company enters into a sales contract over a specified amount, for one of the remaining assets, within six months and the sale closes within twelve months of the redemption, the Company would then remit to WCPT additional proceeds up to but not to exceed $528,150.

F-61

WELLSFORD REAL PROPERTIES, INC. AND SUBSIDIARIES

SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION

The following reconciliation of real estate assets and accumulated depreciation is presented on the going concern basis of accounting at historical cost:

(amounts in thousands)	For the Period November 18 to December 31,			For the Period January 1 to November 17,		For the Years Ended December 31,
	2005			2005		2004		2003
Real Estate
Balance at beginning of period	$	132,334		$	132,311	$	132,293	$	136,723
Additions:
Capital improvements		--			23		18		20
		132,334			132,334		132,311		136,743
Less:
Real estate sold		(132,334	)		--		--		--
Reclassified costs to residential units
available for sale		--			--		--		(4,450	)
Balance at end of period	$	--		$	132,334	$	132,311	$	132,293
Accumulated Depreciation
Balance at beginning of period	$	24,771		$	21,031	$	16,775	$	12,834
Additions:
Charged to operating expense		--			3,740		4,256		4,354
		24,771			24,771		21,031		17,188
Less:
Accumulated depreciation real estate
sold		(24,771	)		--		--		--
Accumulated depreciation on costs
reclassified to residential units
held for sale		--			--		--		(413	)
Balance at end of period	$	--		$	24,771	$	21,031	$	16,775

S-1

EX-10

UNCONDITIONAL GUARANTY

As of December 15, 2005

Claverack Housing Ventures, LLC
c/o Wellsford Real Properties, Inc.
535 Madison Avenue, 26th Floor
New York, New York 10022
(Hereinafter referred to as “Borrower”)

Frank J. Sciame
c/o Sciame Development, Inc.
80 South Street
New York, New York 10038

Wellsford Real Properties, Inc.
535 Madison Avenue
26th Floor
New York, New York 10022
(Frank J. Sciame and Wellsford Real Properties, Inc.
being hereinafter referred to individually
and collectively as “Guarantor”)

Wachovia Bank, National Association
12 East 49th Street
42nd Floor
New York, New York 10017
(Hereinafter referred to as “Bank”)

To induce Bank to make, extend or renew loans, advances, credit, or other financial accommodations to or for the benefit of Borrower, which are and will be to the direct interest and advantage of the Guarantor, and in consideration of loans, advances, credit, or other financial accommodations made, extended or renewed to or for the benefit of Borrower, which are and will be to the direct interest and advantage of the Guarantor, Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Bank and its successors, assigns and, in connection with any swap agreements only, its affiliates, the timely payment and performance of all liabilities and obligations of Borrower to Bank and, in connection with any swap agreements only, its affiliates, relating to that certain development loan in a principal amount of up to $2,000,000 (the “Loan”), evidenced by that certain Building Loan Mortgage Note and that certain Amended and Restated Mortgage Note, each of even date herewith and each between Borrower and Bank (the “Notes”), including, but not limited to, all obligations under any notes, loan agreements, security agreements, letters of credit, instruments, accounts receivable, contracts, drafts, leases, chattel paper, indemnities, acceptances, repurchase agreements, overdrafts, any swap agreement (as defined in 11 U.S.C. § 101, as in effect from time to time), and the Loan Documents, as defined below, in each case if and to the extent relating to the Loan, however and whenever incurred or evidenced, whether primary, secondary, direct, indirect, absolute, contingent, due or to become due, now existing or hereafter contracted or acquired, and all modifications, extensions and renewals thereof, (collectively, the “Guaranteed Obligations”). Initially capitalized terms not otherwise defined herein shall have the meanings assigned thereto in the Building Loan Agreement between Borrower and Bank.

In addition to the above, the Guaranteed Obligations shall further include the full and prompt payment of any loss, cost and/or expenses that the Bank may incur as a result of Borrower’s fraud,

misrepresentation, intentional waste, gross negligence, willful misconduct or misapplication of insurance or condemnation proceeds in connection with or relating to the Loan.

In addition to the above, the Guaranteed Obligations shall further include the full and prompt payment and performance when due of all present and future liability, obligations and indemnifications whatsoever, of Borrower to Bank under and pursuant to the sections of the Loan Documents relating to “Hazardous Material”, with such interest as may accrue thereon and such other charges as may be due in connection therewith, whether such obligations now exist or arise hereafter. Guarantor agrees that, if Borrower does not pay said liability, obligations and indemnifications relating to Hazardous Material, for any reason, Guarantor shall immediately make such payments. Except as provided in the next sentence, Guarantor’s liability, obligations and indemnifications relating to Hazardous Material shall not be discharged or satisfied by repayment of the obligations evidenced by the Loan Documents, or by foreclosure of any mortgage or other security for the Loan, and shall continue in effect after any transfer of the real estate secured thereby, including, without limitation, transfers pursuant to foreclosure (or in lieu of) proceedings and subsequent transfers. Notwithstanding the foregoing, Guarantor’s liability, obligations and indemnifications relating to Hazardous Material shall terminate two (2) years after the repayment in full of the Loan provided that prior to the expiration of said two (2) year period, neither Guarantor, Borrower nor the Bank has knowledge of or received notice with respect to (i) Hazardous Material on the Property, (ii) any action, investigation or proceeding commenced or threatened relating to Hazardous Material alleged to be on the Property, or (iii) any alleged violation by Borrower of any Environmental Law.

Guarantor further covenants and agrees:

GUARANTOR’S LIABILITY. This Guaranty is a continuing and unconditional guaranty of payment and performance and not of collection. The parties to this Guaranty are jointly and severally obligated hereunder. This Guaranty does not impose any obligation on Bank to extend or continue to extend credit or otherwise deal with Borrower at any subsequent time. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of the Guaranteed Obligations is rescinded, avoided or for any other reason must be returned by Bank, and the returned payment shall remain payable as part of the Guaranteed Obligations, all as though such payment had not been made. Except to the extent the provisions of this Guaranty give Bank additional rights, this Guaranty shall not be deemed to supersede or replace any other guaranties given to Bank by Guarantor; and the obligations guaranteed hereby shall be in addition to any other obligations guaranteed by Guarantor pursuant to any other agreement of guaranty given to Bank and other guaranties of the Guaranteed Obligations.

TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty only by written notice, delivered personally to or received by certified or registered United States Mail by an authorized officer of Bank at the address for notices provided herein. Such termination shall be effective only with respect to Guaranteed Obligations arising more than 15 days after the date such written notice is received by said Bank officer. Such termination shall not be effective with respect to Guaranteed Obligations (including any subsequent extensions, modifications or compromises of the Guaranteed Obligations) then existing, or Guaranteed Obligations arising subsequent to receipt by Bank of said notice if such Guaranteed Obligations are a result of Bank’s obligation to make advances pursuant to a commitment, or are based on Borrower’s obligations to make payments pursuant to any swap agreement (as defined in 11 U.S.C. § 101, as in effect from time to time), entered into prior to expiration of the 15 day notice period, or are a result of advances which are necessary for Bank to protect its collateral or otherwise preserve its interests, in each case if and to the extent relating to the Loan. Termination of this Guaranty by any single Guarantor will not affect the existing and continuing obligations of any other Guarantor hereunder.

CONSENT TO MODIFICATIONS. Guarantor consents and agrees that Bank (and, with respect to swap obligations, its affiliates) may from time to time, in its sole discretion, without affecting, impairing, lessening or releasing the obligations of Guarantor hereunder: (a) extend or modify the time, manner, place or terms of payment or performance and/or otherwise change or modify the credit terms of the

Guaranteed Obligations; (b) increase, renew, or enter into a novation of the Guaranteed Obligations; (c) waive or consent to the departure from terms of the Guaranteed Obligations; (d) permit any change in the business or other dealings and relations of Borrower or any other guarantor with Bank; (e) proceed against, exchange, release, realize upon, or otherwise deal with in any manner with any collateral that is or may be held by Bank in connection with the Guaranteed Obligations or any liabilities or obligations of Guarantor; and (f) proceed against, settle, release, or compromise with Borrower, any insurance carrier, or any other person or entity liable as to any part of the Guaranteed Obligations, and/or subordinate the payment of any part of the Guaranteed Obligations to the payment of any other obligations, which may at any time be due or owing to Bank; all in such manner and upon such terms as Bank may deem appropriate, and without notice to or further consent from Guarantor. No invalidity, irregularity, discharge or unenforceability of, or action or omission by Bank relating to any part of the Guaranteed Obligations or any security therefor shall affect or impair this Guaranty.

WAIVERS AND ACKNOWLEDGMENTS. Guarantor waives and releases the following rights, demands, and defenses Guarantor may have with respect to Bank (and, with respect to swap obligations, its affiliates) and collection of the Guaranteed Obligations: (a) promptness and diligence in collection of any of the Guaranteed Obligations from Borrower or any other person liable thereon, and in foreclosure of any security interest and sale of any property serving as collateral for the Guaranteed Obligations; (b) any law or statute that requires that Bank (and, with respect to swap obligations, its affiliates) make demand upon, assert claims against, or collect from Borrower or other persons or entities, foreclose any security interest, sell collateral, exhaust any remedies, or take any other action against Borrower or other persons or entities prior to making demand upon, collecting from or taking action against Guarantor with respect to the Guaranteed Obligations; (c) any law or statute that requires that Borrower or any other person be joined in, notified of or made part of any action against Guarantor; (d) that Bank or its affiliates preserve, insure or perfect any security interest in collateral or sell or dispose of collateral in a particular manner or at a particular time, provided that Bank’s obligation to dispose of Collateral in a commercially reasonable manner is not waived hereby; (e) notice of extensions, modifications, renewals, or novations of the Guaranteed Obligations, of any new transactions or other relationships between Bank, Borrower and/or any guarantor, and of changes in the financial condition of, ownership of, or business structure of Borrower or any other guarantor; (f) presentment, protest, notice of dishonor, notice of default, demand for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale, and all other notices of any kind whatsoever to which Guarantor may be entitled; (g) the right to assert against Bank or its affiliates any defense (legal or equitable), set-off, counterclaim, or claim that Guarantor may have at any time against Borrower or any other party liable to Bank or its affiliates; (h) all defenses relating to invalidity, insufficiency, unenforceability, enforcement, release or impairment of Bank or its affiliates’ lien on any collateral, of the Loan Documents, or of any other guaranties held by Bank; (i) any right to which Guarantor is or may become entitled to be subrogated to Bank or its affiliates’ rights against Borrower or to seek contribution, reimbursement, indemnification, payment or the like, or participation in any claim, right or remedy of Bank or its affiliates against Borrower or any security which Bank or its affiliates now has or hereafter acquires, until such time as the Guaranteed Obligations have been fully satisfied beyond the expiration of any applicable preference period; (j) any claim or defense that acceleration of maturity of the Guaranteed Obligations is stayed against Guarantor because of the stay of assertion or of acceleration of claims against any other person or entity for any reason including the bankruptcy or insolvency of that person or entity; and (k) the right to marshalling of Borrower’s assets or the benefit of any exemption claimed by Guarantor. Guarantor acknowledges and represents that Guarantor has relied upon Guarantor’s own due diligence in making an independent appraisal of Borrower, Borrower’s business affairs and financial condition, and any collateral; Guarantor will continue to be responsible for making an independent appraisal of such matters; and Guarantor has not relied upon Bank or its affiliates for information regarding Borrower or any collateral.

FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank and its affiliates that on and after the date hereof (and with respect to Wellsford Properties, Inc., except as otherwise described in the Guarantor’s public reports): (a) the fair saleable value of Guarantor’s assets exceeds its

liabilities, Guarantor is meeting its current liabilities as they mature, and Guarantor is and shall remain solvent; (b) all financial statements of Guarantor furnished to Bank are correct and accurately reflect the financial condition of Guarantor as of the respective dates thereof; (c) since the date of such financial statements, there has not occurred a material adverse change in the financial condition of Guarantor; (d) there are not now pending any court or administrative proceedings or undischarged judgments against Guarantor, no federal or state tax liens have been filed or threatened against Guarantor, and Guarantor is not in default or claimed default under any agreement; and (e) at such reasonable times as Bank requests, Guarantor will furnish Bank and its affiliates with such other financial information as Bank and its affiliates may reasonably request.

INTEREST AND APPLICATION OF PAYMENTS. Regardless of any other provision of this Guaranty or other Loan Documents, if for any reason the effective interest on any of the Guaranteed Obligations should exceed the maximum lawful interest, the effective interest shall be deemed reduced to and shall be such maximum lawful interest, and any sums of interest which have been collected in excess of such maximum lawful interest shall be applied as a credit against the unpaid principal balance of the Guaranteed Obligations. Monies received from any source by Bank or its affiliates for application toward payment of the Guaranteed Obligations may be applied to such Guaranteed Obligations in any manner or order deemed appropriate by Bank and its affiliates.

DEFAULT. If any of the following events occur, a default (“Default”) under this Guaranty shall exist: (a) failure of timely payment or performance of the Guaranteed Obligations or a default beyond the expiration of any applicable notice, grace or cure period, under any Loan Document; (b) a breach of any agreement or representation contained or referred to in the Guaranty, or any of the Loan Documents, whether now existing or hereafter arising; or (c) the death of, appointment of a guardian for, dissolution of, termination of existence of, loss of good standing status by, appointment of a receiver for, assignment for the benefit of creditors of, or the commencement of any insolvency or bankruptcy proceeding by or against Guarantor.

If a Default occurs, the Guaranteed Obligations shall be due immediately and payable without notice, other than Guaranteed Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) with Bank or its affiliates, which shall be due in accordance with and governed by the provisions of said swap agreements, and, Bank and its affiliates may exercise any rights and remedies as provided in this Guaranty and other Loan Documents, or as provided at law or equity. Guarantor shall pay interest on the Guaranteed Obligations from such Default at the highest rate of interest charged on any of the Guaranteed Obligations.

ATTORNEYS’ FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of Bank’s and, in respect of any swap agreements, its affiliates’ reasonable expenses incurred to enforce or collect any of the Guaranteed Obligations, including, without limitation, reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether incurred without the commencement of a suit, in any suit, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the obligations now or hereafter owed by Borrower to Guarantor (“Subordinated Debt”) to any and all obligations of Borrower to Bank or its affiliates now or hereafter existing while this Guaranty is in effect, provided however that Guarantor may receive regularly scheduled principal and interest payments on the Subordinated Debt so long as (i) all sums due and payable by Borrower to Bank and its affiliates have been paid in full on or prior to such date, and (ii) no event or condition which constitutes or which with notice or the lapse or time would constitute an event of default with respect to the Guaranteed Obligations shall be continuing on or as of the payment date; (b) Guarantor will endeavor to place a legend indicating such subordination on every note, ledger page or other document evidencing any part of the Subordinated Debt or deliver such documents to Bank; and (c) except as permitted by this paragraph, Guarantor will not request or accept payment of or any security for any part of the Subordinated Debt, and any proceeds of the Subordinated

Debt paid to Guarantor, through error or otherwise, shall immediately be forwarded to Bank by Guarantor, properly endorsed to the order of Bank, to apply to the Guaranteed Obligations.

MISCELLANEOUS. Assignment. This Guaranty and other Loan Documents shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. Bank’s interests in and rights under this Guaranty and other Loan Documents are freely assignable, in whole or in part, by Bank. Any assignment shall not release Guarantor from the Guaranteed Obligations. Organization; Powers. Guarantor (i) is (a) an adult individual and is sui juris, or (b) a corporation, general partnership, limited partnership, limited liability company or other legal entity (as indicated below), duly organized, validly existing and in good standing under the laws of its state of organization, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such organization, (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (iii) has the power and authority to execute, deliver and perform, and by all necessary action has authorized the execution, delivery and performance of, all of its obligations under this Guaranty and any other Loan Document to which it is a party. Applicable Law; Conflict Between Documents. This Guaranty shall be governed by and construed under the laws of the state named in Bank’s address shown above without regard to that state’s conflict of laws principles. If the terms of this Guaranty should conflict with the terms of any commitment letter that survives closing, the terms of this Guaranty shall control. Guarantor’s Accounts. Except as prohibited by law, Guarantor grants Bank and its affiliates a security interest in all of Guarantor’s accounts with Bank and its affiliates. Jurisdiction. Guarantor irrevocably agrees to non-exclusive personal jurisdiction in the state named in Bank’s address shown above. Severability. If any provision of this Guaranty or of the other Loan Documents shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty or other Loan Documents. Notices. Any notices to Guarantor shall be sufficiently given if in writing and mailed or delivered to Guarantor’s address shown above or such other address as provided hereunder, and to Bank, if in writing and mailed or delivered to Wachovia Bank, National Association, 12 East 49^th Street, New York, New York 10017 or such other address as Bank may specify in writing from time to time. Notices to Bank must include the mail code. In the event that Guarantor changes Guarantor’s address at any time prior to the date the Guaranteed Obligations are paid in full, Guarantor agrees to promptly give written notice of said change of address to Bank by registered or certified mail, return receipt requested, all charges prepaid. Plural; Captions. All references in the Loan Documents to borrower, guarantor, person, document or other nouns of reference mean both the singular and plural form, as the case may be, and the term “person” shall mean any individual person or entity. The captions contained in the Loan Documents are inserted for convenience only and shall not affect the meaning or interpretation of the Loan Documents. Binding Contract. Guarantor by execution of and Bank by acceptance of this Guaranty agree that each party is bound to all terms and provisions of this Guaranty. Amendments, Waivers and Remedies. No waivers, amendments or modifications of this Guaranty and other Loan Documents shall be valid unless in writing and signed by an officer of Bank. No waiver by Bank or its affiliates of any Default shall operate as a waiver of any other Default or the same Default on a future occasion. Neither the failure nor any delay on the part of Bank or its affiliates in exercising any right, power, or privilege granted pursuant to this Guaranty and other Loan Documents shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege. All remedies available to Bank or its affiliates with respect to this Guaranty and other Loan Documents and remedies available at law or in equity shall be cumulative and may be pursued concurrently or successively. Partnerships. If Guarantor is a partnership, the obligations, liabilities and agreements on the part of Guarantor shall remain in full force and effect and fully applicable notwithstanding any changes in the individuals comprising the partnership. The term “Guarantor” includes any altered or successive partnerships, and predecessor partnership(s) and the partners shall not be released from any obligations or liabilities hereunder. Loan Documents. The term “Loan Documents” has the meaning assigned to such term in the Notes. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION

PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. FINAL AGREEMENT. This Agreement and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

FINANCIAL COVENANTS. Guarantor agrees to the following provisions from the date hereof until final payment in full of the Guaranteed Obligations, unless Bank shall otherwise consent in writing, using the financial information for Guarantor, its subsidiaries, affiliates and its holding or parent company, as applicable: Net Worth.  Wellsford Real Properties, Inc. shall maintain a Net Worth of not less than $15,000,000, and Frank J. Sciame shall maintain a Net Worth of not less than $20,000,000, in each case measured quarterly calculated in accordance with generally accepted accounting principles (GAAP) based on, in the case of Wellsford Real Properties, Inc., its 10Q and 10K Statements, and in the case of Frank J. Sciame, on his financial statements. “Net Worth” shall mean total assets minus Total Liabilities. “Total Liabilities” shall mean all liabilities of Guarantor, including capitalized leases and all reserves for deferred taxes, debt fully subordinated to Bank on terms and conditions acceptable to Bank, and other deferred sums appearing on the liabilities side of a balance sheet and all obligations as lessee under off-balance sheet synthetic leases of Guarantor, all in accordance with generally accepted accounting principles applied on a consistent basis.  Liquidity Requirement. Wellsford Real Properties, Inc. shall maintain Liquid Assets of not less than $10,000,000, and Frank J. Sciame shall maintain Liquid Assets of not less than $1,500,000, in each case measured quarterly calculated in accordance with generally accepted accounting principles (GAAP) based on, in the case of Wellsford Real Properties, Inc., its 10Q and 10K Statements, and in the case of Frank J. Sciame, on his financial statements. “Liquid Assets” shall mean the sum of all cash, time deposits and marketable securities.

FINANCIAL AND OTHER INFORMATION. Wellsford Real Properties, Inc. shall deliver to Bank within 30 days after submission of same to the SEC copies of its 10Q and 10K Statements. Frank J. Sciame shall deliver to Bank such information as Bank may reasonably request from time to time, including without limitation, financial statements and information pertaining to Frank J. Sciame’s financial condition. Such information shall be true, complete, and accurate.

NEGATIVE COVENANTS. Guarantor agrees that from the date hereof and until final payment in full of the Guaranteed Obligations, unless Bank shall otherwise consent in writing, Guarantor will not:   Default on Other Contracts or Obligations. Default on any material contract with or obligation when due to a third party or default in the performance of any obligation to a third party incurred for money borrowed in connection with the Project that is subject to the Loan.

TAX RETURNS. Guarantor shall deliver to Bank, within 30 days of filing, complete copies of federal and state tax returns, as applicable, together with all schedules thereto, each of which shall be signed and certified by Guarantor to be true and complete copies of such returns. In the event an extension is filed, Guarantor shall deliver a copy of the extension within 30 days of filing.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF GUARANTOR BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE

EXECUTED IN CONNECTION WITH THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS GUARANTY. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS GUARANTY.

[Balance of page left blank; signature page follows]

IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has caused this Unconditional Guaranty to be executed.

/s/ Frank J. Sciame
FRANK J. SCIAME
WELLSFORD REAL PROPERTIES, INC.
By:	/s/ William H. Darrow
Name:	William H. Darrow II	Title:	Vice President

EX-10

AMENDED AND RESTATED MORTGAGE NOTE
$376,627.13	December 15, 2005

Claverack Housing Ventures, LLC
c/o Wellsford Real Properties
535 Madison Avenue, 26th Floor
New York, New York 10022
(Individually and collectively “Borrower”)

Wachovia Bank, National Association
12 East 49th Street
42nd Floor
New York, New York 10017
(Hereinafter referred to as “Bank”)

Borrower promises to pay to the order of Bank, in lawful money of the United States of America, at its office indicated above or wherever else Bank may specify, the sum of Three Hundred Seventy-Six Thousand Six Hundred Twenty Seven and 13/100 Dollars $376,627.13) or such sum as may be advanced and outstanding from time to time, with interest on the unpaid principal balance at the rate and on the terms provided in this Amended and Restated Mortgage Note (including all renewals, extensions or modifications hereof, this “Note”).

AMENDMENT AND RESTATEMENT. This Note amends and restates in its entirety the note dated as of March 10, 2003 given by Millbrook Road, LLC to The Arnold Family Limited Partnership in the original principal sum of $594,000 as reduced to $376,627.13, which note and the mortgage securing such note have been assigned this date to the Bank.

USE OF PROCEEDS. Borrower shall use the proceeds of the loan evidenced by this Note for the commercial purposes of Borrower, as follows: to refinance existing indebtedness incurred in connection with the acquisition of the real property described in the mortgage securing this Note.

SECURITY.  Borrower has granted Bank a security interest in the collateral described in the Loan Documents, including, but not limited to, real and personal property collateral described in that certain security instrument of even date herewith.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this Note during each Interest Period from the date hereof at a rate per annum equal to the LIBOR Market Index Rate plus 220 basis points (“Interest Rate”). “LIBOR Market Index Rate” means for any day the rate for U.S. dollar deposits for a period of one month, as reported on Telerate page 3750 as of 11:00 a.m., London time, on the date on which such rate would be in effect, or if such day is not a business day, then the immediately preceding business day (or if not so reported, then as determined by the Bank from another recognized source or interbank quotation).

DEFAULT RATE. In addition to all other rights contained in this Note, if a Default (as defined herein) occurs and as long as a Default continues, all outstanding Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank or its affiliates, shall bear interest at the Interest Rate plus 3% (“Default Rate”). The Default Rate shall also apply from acceleration until the Obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be computed on the basis of a 360-day year for the actual number of days in the applicable period (“Actual/360 Computation”). The Actual/360 Computation determines the annual effective yield by taking the stated

(nominal) rate for a year’s period and then dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the applicable period. Application of the Actual/360 Computation produces an annualized effective interest rate exceeding the nominal rate.

REPAYMENT TERMS; EXTENSION OF MATURITY. This Note shall be due and payable in consecutive monthly payments of accrued interest only, commencing on January 2, 2006, and continuing on the same day of each month thereafter until fully paid. In any event, all principal and accrued interest shall be due and payable on December 15, 2006 (the “Maturity Date”); subject to the extension as set forth in the next paragraph.

The Maturity Date may be extended at Borrower’s option to June 15, 2007, provided:

(i) Borrower on or before October 15, 2006 gives Bank written notice of its intention to extend the Maturity Date;

(ii) No Default exists;

(iii) Borrower has completed the construction lien free of one Home, and a temporary or permanent certificate of occupancy has been issues for such Home; and

(iv) Borrower has obtained approval from all required Governmental Authorities for the subdivision and development of the West Side Parcel (as defined in the Building Loan Agreement) into not less than 48 buildable lots in accordance with the proposed subdivision plan approved by the Bank.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal. If a Default occurs, monies may be applied to the Obligations in any manner or order deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is rescinded, avoided or for any reason returned by Bank because of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note or other Loan Documents as though such payment had not been made.

DEFINITIONS. Loan Documents. The term “Loan Documents”, as used in this Note and the other Loan Documents, refers to all documents executed in connection with or related to the loan evidenced by this Note and any prior notes which evidence all or any portion of the loan evidenced by this Note, and any letters of credit issued pursuant to any loan agreement to which this Note is subject, any applications for such letters of credit and any other documents executed in connection therewith or related thereto, and may include, without limitation, the Building Loan Agreement dated as of the date hereof between Borrower and the Bank (the “Building Loan Agreement”), the mortgage securing the Borrower’s obligations under the Building Loan Agreement (the “Building Loan Mortgage”), this Note, the note secured by the Building Loan Mortgage, guaranty agreements, security agreements, security instruments, financing statements, mortgage instruments, any renewals or modifications, whenever any of the foregoing are executed, but does not include swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time). Obligations. The term “Obligations”, as used in this Note and the other Loan Documents, refers to any and all indebtedness and other obligations under this Note, all other obligations under any other Loan Document(s), and all obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank, or its affiliates, whenever executed. Certain Other Terms. All terms that are used but not otherwise defined in any of the Loan Documents shall have the definitions provided in the Uniform Commercial Code.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to Bank a late charge equal to 5% of each payment past due for 10 or more days. This late charge shall not apply to payments due at maturity or by acceleration hereof, unless such late payment is in an amount not greater than the highest periodic payment due hereunder.

-2-

Acceptance by Bank of any late payment without an accompanying late charge shall not be deemed a waiver of Bank’s right to collect such late charge or to collect a late charge for any subsequent late payment received.

If this Note is secured by owner-occupied residential real property located outside the state in which the office of Bank first shown above is located, the late charge laws of the state where the real property is located shall apply to this Note and the late charge shall be the highest amount allowable under such laws. If no amount is stated thereunder, the late charge shall be 5% of each payment past due for 10 or more days.

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank’s reasonable expenses incurred to enforce or collect any of the Obligations including, without limitation, reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for this paragraph, exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum lawful rate, and any amount received by Bank in excess of such rate shall be applied to principal and then to fees and expenses, or, if no such amounts are owing, returned to Borrower.

DEFAULT. If any of the following occurs, a default (“Default”) under this Note shall exist: Nonpayment; Nonperformance. The failure of timely payment or performance of the Obligations or Default under this Note or any other Loan Documents. False Warranty. A warranty or representation made or deemed made in the Loan Documents or furnished Bank in connection with the loan evidenced by this Note proves materially false, or if of a continuing nature, becomes materially false. Cross Default. At Bank’s option, any default in payment or performance beyond any applicable notice, grace and/or cure periods of any obligation under any other loans, contracts or agreements of Borrower. Cessation; Bankruptcy. The death of, appointment of a guardian for, dissolution of, termination of existence of, loss of good standing status by, appointment of a receiver for, assignment for the benefit of creditors of, or commencement of any bankruptcy or insolvency proceeding by or against Borrower, or any party to the Loan Documents. Material Capital Structure or Business Alteration. Without prior written consent of Bank, (i) a material alteration in the kind or type of Borrower’s business; (ii) the sale of substantially all of the business or assets of Borrower, or a material portion (10% or more) of such business or assets if such a sale is outside the ordinary course of business of Borrower, or more than 50% of the outstanding membership interests of Borrower in a single transaction or a series of transactions, in each case other than pursuant to the buy/sell provisions of the LLC Agreement of Borrower (provided that notice thereof shall be given to the Bank); (iii) the acquisition of substantially all of the business or assets or more than 50% of the outstanding stock or voting power of any other entity; or (iv) should any Borrower or any of Borrower’s Subsidiaries or Affiliates enter into any merger or consolidation; provided, however, that nothing contained in the foregoing clauses (I) through (iv) shall be construed as to restrict (a) a transfer of a non-controlling interest in the Borrower and (b) a transfer of any of the stock of the managing member of the Borrower so long as Jeffrey Lynford continues to either be the Chief Executive Officer of the managing member of the Borrower or hold a senior position in the managing member of the Borrower holding decision making authority with respect to the Project, and no such transfer described in the foregoing clauses (a) or (b) shall constitute a default hereunder. Notwithstanding any other provision of this Note, any Default by Borrower of an obligation to make a payment under this Note (a “Payment Default”) shall be subject to a ten (10) day cure period (without requiring written notice) and any Default of any other obligation of Borrower shall be subject to a cure period of thirty (30) days after written notice of such default. Furthermore, in the event that any Default that is not a Payment Default cannot reasonably be cured within such thirty (30) day cure period, such cure period shall be extended so long as (v) such Default is bonded over by Borrower, (w) Borrower has commenced such cure within the initial thirty (30) day cure period, (x) Borrower diligently pursues such cure to completion, (y) such default is resolved within ninety (90) days from the initial occurrence thereof, and (z) such delay in the cure does not materially injure Bank. Material Adverse Change. Bank determines in good faith, in its sole

-3-

discretion, that the prospects for payment or performance of the Obligations are impaired or there has occurred a material adverse change in the business or prospects of Borrower, financial or otherwise.

REMEDIES UPON DEFAULT. If a Default occurs beyond applicable notice, grace and/or cure periods under this Note or any Loan Documents, Bank may at any time thereafter, take the following actions:  Bank Lien. Foreclose its security interest or lien against Borrower’s accounts without notice. Acceleration Upon Default. Accelerate the maturity of this Note and, at Bank’s option, any or all other Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank, or its affiliates, which shall be due in accordance with and governed by the provisions of said swap agreements; whereupon this Note and the accelerated Obligations shall be immediately due and payable; provided, however, if the Default is based upon a bankruptcy or insolvency proceeding commenced by or against Borrower or any guarantor or endorser of this Note and if such bankruptcy or insolvency proceeding is involuntary, such has not been dismissed within 90 days of the commencement thereof, all Obligations (other than Obligations under any swap agreement as referenced above) shall automatically and immediately be due and payable. Cumulative. Exercise any rights and remedies as provided under the Note and other Loan Documents, or as provided by law or equity.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and other Loan Documents shall be valid unless in writing and signed by an officer of Bank. No waiver by Bank of any Default shall operate as a waiver of any other Default or the same Default on a future occasion. Neither the failure nor any delay on the part of Bank in exercising any right, power, or remedy under this Note and other Loan Documents shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy. Except to the extent otherwise provided by the Loan Documents or prohibited by law, Borrower and any other person liable under this Note waives presentment, protest, notice of dishonor, demand for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and all other notices of any kind. Further, each agrees that Bank may (i) extend, modify or renew this Note or make a novation of the loan evidenced by this Note, and/or (ii) grant releases, compromises or indulgences with respect to any collateral securing this Note, or with respect to Borrower or other person liable under this Note or any other Loan Documents, all without notice to or consent of Borrower and other such person, and without affecting the liability of Borrower and other such person; provided, Bank may not extend, modify or renew this Note or make a novation of the loan evidenced by this Note without the consent of Borrower.

MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. Bank’s interests in and rights under this Note and the other Loan Documents are freely assignable, in whole or in part, by Bank. In addition, nothing in this Note or any of the other Loan Documents shall prohibit Bank from pledging or assigning this Note or any of the other Loan Documents or any interest therein to any Federal Reserve Bank. Borrower shall not assign its rights and interest hereunder without the prior written consent of Bank, and any attempt by Borrower to assign without Bank’s prior written consent is null and void. Any assignment shall not release Borrower from the Obligations. Applicable Law; Conflict Between Documents. This Note and, unless otherwise provided in any other Loan Document, the other Loan Documents shall be governed by and construed under the laws of the state named in Bank’s address on the first page hereof without regard to that state’s conflict of laws principles. If the terms of this Note should conflict with the terms of any loan agreement or any commitment letter that survives closing, the terms of this Note shall control. Borrower’s Accounts. Except as prohibited by law, Borrower grants Bank a security interest in all of Borrower’s accounts with Bank and any of its affiliates. Swap Agreements. All swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time), if any, between Borrower and Bank or its affiliates are independent agreements governed by the written provisions of said swap agreements, which will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of this Note, except as otherwise expressly provided in said written swap agreements, and any

-4-

payoff statement from Bank relating to this Note shall not apply to said swap agreements unless expressly referred to in such payoff statement. Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state named in Bank’s address on the first page hereof. Severability. If any provision of this Note or of the other Loan Documents shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or other such document. Notices. Any notices to Borrower shall be sufficiently given, if in writing and mailed or delivered to the Borrower’s address shown above or such other address as provided hereunder, and to Bank, if in writing and mailed or delivered to Wachovia Bank, National Association, 12 East 49^th Street, 42^nd Floor, New York, New York 10017 or such other address as Bank may specify in writing from time to time. Notices to Bank must include the mail code. In the event that Borrower changes Borrower’s address at any time prior to the date the Obligations are paid in full, Borrower agrees to promptly give written notice of said change of address by registered or certified mail, return receipt requested, all charges prepaid. Plural; Captions. All references in the Loan Documents to Borrower, guarantor, person, document or other nouns of reference mean both the singular and plural form, as the case may be, and the term “person” shall mean any individual, person or entity. The captions contained in the Loan Documents are inserted for convenience only and shall not affect the meaning or interpretation of the Loan Documents. Advances. Bank may, in its sole discretion, make other advances which shall be deemed to be advances under this Note, even though the stated principal amount of this Note may be exceeded as a result thereof. Posting of Payments. All payments received during normal banking hours after 2:00 p.m. local time at the office of Bank first shown above shall be deemed received at the opening of the next banking day. Joint and Several Obligations. If there is more than one Borrower, each is jointly and severally obligated. Fees and Taxes. Borrower shall promptly pay all documentary, intangible recordation and/or similar taxes on this transaction whether assessed at closing or arising from time to time. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. Patriot Act Notice. To help fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. For purposes of this section, account shall be understood to include loan accounts. FINAL AGREEMENT. This Note and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

-5-

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has caused this Note to be executed under seal.

CLAVERACK HOUSING VENTURES, LLC
By:	Wellsford Real Properties, Inc. Managing Member
	By:	/s/ William H. Darrow
		Name:    William H. Darrow II Title:    Vice President

-6-

EX-10

BUILDING LOAN MORTGAGE NOTE
$1,623,372.87
	December 15, 2005

Claverack Housing Ventures, LLC
c/o Wellsford Real Properties
535 Madison Avenue, 26th Floor
New York, New York 10022
(Individually and collectively “Borrower”)

Wachovia Bank, National Association
12 East 49th Street
42nd Floor
New York, New York 10017
(Hereinafter referred to as “Bank”)

Borrower promises to pay to the order of Bank, in lawful money of the United States of America, at its office indicated above or wherever else Bank may specify, the sum of One Million Six Hundred Twenty- Three Thousand Three Hundred Seventy Two and 87/100 Dollars $1,623,372.87) or such sum as may be advanced and outstanding from time to time, with interest on the unpaid principal balance at the rate and on the terms provided in this Building Loan Mortgage Note (including all renewals, extensions or modifications hereof, this “Note”).

BUILDING LOAN AGREEMENT. This Note is subject to the provisions of that certain Building Loan Agreement between Bank and Borrower of even date herewith, as modified from time to time (the “Building Loan Agreement”).

NON-REVOLVING CONSTRUCTION LINE OF CREDIT. Borrower may borrow, and, upon the request of Borrower, Bank shall advance under this Note from time to time until the maturity hereof the amount so requested (each an “Advance” and together the “Advances”), so long as the total principal balance outstanding under this Note at any one time does not exceed the principal amount stated on the face of this Note, subject to the limitations described in the Building Loan Agreement to which this Note is subject. Bank’s obligation to make Advances under this Note shall terminate if Borrower is in Default. As of the date of each proposed Advance, Borrower shall be deemed to represent that each representation made in the Loan Documents is true as of such date. Advances, once repaid, may not be reborrowed.

USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by this Note for the commercial purposes of Borrower, as follows: for infrastructure development and the construction of 1 Home, as more specifically set forth in the Building Loan Agreement.

SECURITY.  Borrower has granted Bank a security interest in the collateral described in the Loan Documents, including, but not limited to, real and personal property collateral described in that certain security instrument of even date herewith.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this Note during each Interest Period from the date hereof at a rate per annum equal to the LIBOR Market Index Rate plus 220 basis points (“Interest Rate”). LIBOR Market Index Rate” means for any day, the rate for U.S. dollar deposits for a period of one month, as reported on Telerate page 3750 as of 11:00 a.m., London time, on the date on which such rate would be in effect, or if such day is not a business day, then the immediately preceding business day (or if not so reported, then as determined by the Bank from another recognized source or interbank quotation).

DEFAULT RATE. In addition to all other rights contained in this Note, if a Default (as defined herein) occurs and as long as a Default continues, all outstanding Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank or its affiliates, shall bear interest at the Interest Rate plus 3% (“Default Rate”). The Default Rate shall also apply from acceleration until the Obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be computed on the basis of a 360-day year for the actual number of days in the applicable period (“Actual/360 Computation”). The Actual/360 Computation determines the annual effective yield by taking the stated (nominal) rate for a year’s period and then dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the applicable period. Application of the Actual/360 Computation produces an annualized effective interest rate exceeding the nominal rate.

REPAYMENT TERMS; EXTENSION OF MATURITY. This Note shall be due and payable in consecutive monthly payments of accrued interest only, commencing on January 2, 2006, and continuing on the same day of each month thereafter until fully paid. In any event, all principal and accrued interest shall be due and payable on December 15, 2006 (the “Maturity Date”); subject to the extension as set forth in the next paragraph.

The Maturity Date may be extended at Borrower’s option to June 15, 2007, provided:

(i) Borrower on or before October 15, 2006 gives Bank written notice of its intention to extend the Maturity Date;

(ii) No Default exists;

(iii) Borrower has completed the construction lien free of one Home, and a temporary or permanent certificate of occupancy has been issues for such Home; and

(iv) Borrower has obtained approval from all required Governmental Authorities for the subdivision and development of the West Side Parcel (as defined in the Building Loan Agreement) into not less than 48 buildable lots in accordance with the proposed subdivision plan approved by the Bank.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal. If a Default occurs, monies may be applied to the Obligations in any manner or order deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is rescinded, avoided or for any reason returned by Bank because of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note or other Loan Documents as though such payment had not been made.

DEFINITIONS. Loan Documents. The term “Loan Documents”, as used in this Note and the other Loan Documents, refers to all documents executed in connection with or related to the loan evidenced by this Note and any prior notes which evidence all or any portion of the loan evidenced by this Note, and any letters of credit issued pursuant to any loan agreement to which this Note is subject, any applications for such letters of credit and any other documents executed in connection therewith or related thereto, and may include, without limitation, the Building Loan Agreement, the Acquisition Loan Mortgage (as defined in the Building Loan Agreement), this Note, the note secured by the Acquisition Loan Mortgage, guaranty agreements, security agreements, security instruments, financing statements, mortgage instruments, any renewals or modifications, whenever any of the foregoing are executed, but does not include swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time). Obligations. The term “Obligations”, as used in this Note and the other Loan Documents, refers to any and all indebtedness and other obligations under this Note, all other obligations under any other Loan Document(s), and all obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time)

-2-

between Borrower and Bank, or its affiliates, whenever executed. Certain Other Terms. All terms that are used but not otherwise defined in any of the Loan Documents shall have the definitions provided in the Uniform Commercial Code.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to Bank a late charge equal to 5% of each payment past due for 10 or more days. This late charge shall not apply to payments due at maturity or by acceleration hereof, unless such late payment is in an amount not greater than the highest periodic payment due hereunder.

Acceptance by Bank of any late payment without an accompanying late charge shall not be deemed a waiver of Bank’s right to collect such late charge or to collect a late charge for any subsequent late payment received.

If this Note is secured by owner-occupied residential real property located outside the state in which the office of Bank first shown above is located, the late charge laws of the state where the real property is located shall apply to this Note and the late charge shall be the highest amount allowable under such laws. If no amount is stated thereunder, the late charge shall be 5% of each payment past due for 10 or more days.

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank’s reasonable expenses incurred to enforce or collect any of the Obligations including, without limitation, reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for this paragraph, exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum lawful rate, and any amount received by Bank in excess of such rate shall be applied to principal and then to fees and expenses, or, if no such amounts are owing, returned to Borrower.

DEFAULT. If any of the following occurs, a default (“Default”) under this Note shall exist: Nonpayment; Nonperformance. The failure of timely payment or performance of the Obligations or Default under this Note or any other Loan Documents. False Warranty. A warranty or representation made or deemed made in the Loan Documents or furnished Bank in connection with the loan evidenced by this Note proves materially false, or if of a continuing nature, becomes materially false. Cross Default. At Bank’s option, any default in payment or performance beyond any applicable notice, grace and/or cure periods of any obligation under any other loans, contracts or agreements of Borrower. Cessation; Bankruptcy. The death of, appointment of a guardian for, dissolution of, termination of existence of, loss of good standing status by, appointment of a receiver for, assignment for the benefit of creditors of, or commencement of any bankruptcy or insolvency proceeding by or against Borrower, or any party to the Loan Documents. Material Capital Structure or Business Alteration. Without prior written consent of Bank, (i) a material alteration in the kind or type of Borrower’s business; (ii) the sale of substantially all of the business or assets of Borrower, or a material portion (10% or more) of such business or assets if such a sale is outside the ordinary course of business of Borrower, or more than 50% of the outstanding membership interests of Borrower in a single transaction or a series of transactions in each case other than pursuant to the buy/sell provisions of the LLC Agreement of Borrower (provided that notice thereof shall be given to the Bank); (iii) the acquisition of substantially all of the business or assets or more than 50% of the outstanding stock or voting power of any other entity; or (iv) should any Borrower or any of Borrower’s Subsidiaries or Affiliates enter into any merger or consolidation; provided, however, that nothing contained in the foregoing clauses (i) through (iv) shall be construed as to restrict (a) a transfer of a non-controlling interest in the Borrower and (b) a transfer of any of the stock of the managing member of the Borrower so long as Jeffrey Lynford continues to either be the Chief Executive Officer of the managing member of the Borrower or hold a senior position in the managing member of the Borrower holding decision making authority with respect to the Project, and no such transfer described in the foregoing clauses (a) or (b) shall constitute a default hereunder. Notwithstanding any other provision of this Note, any Default by Borrower of an obligation to make a payment under this Note (a “Payment

-3-

Default”) shall be subject to a ten (10) day cure period (without requiring written notice) and any Default of any other obligation of Borrower shall be subject to a cure period of thirty (30) days after written notice of such default. Furthermore, in the event that any Default that is not a Payment Default cannot reasonably be cured within such thirty (30) day cure period, such cure period shall be extended so long as (v) such Default is bonded over by Borrower, (w) Borrower has commenced such cure within the initial thirty (30) day cure period, (x) Borrower diligently pursues such cure to completion, (y) such default is resolved within ninety (90) days from the initial occurrence thereof, and (z) such delay in the cure does not materially injure Bank. Material Adverse Change. Bank determines in good faith, in its sole discretion, that the prospects for payment or performance of the Obligations are impaired or there has occurred a material adverse change in the business or prospects of Borrower, financial or otherwise.

REMEDIES UPON DEFAULT. If a Default occurs beyond applicable notice, grace and/or cure periods under this Note or any Loan Documents, Bank may at any time thereafter, take the following actions:  Bank Lien. Foreclose its security interest or lien against Borrower’s accounts without notice. Acceleration Upon Default. Accelerate the maturity of this Note and, at Bank’s option, any or all other Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank, or its affiliates, which shall be due in accordance with and governed by the provisions of said swap agreements; whereupon this Note and the accelerated Obligations shall be immediately due and payable; provided, however, if the Default is based upon a bankruptcy or insolvency proceeding commenced by or against Borrower or any guarantor or endorser of this Note and if such bankruptcy or insolvency proceeding is involuntary, such has not been dismissed within 90 days of the commencement thereof, all Obligations (other than Obligations under any swap agreement as referenced above) shall automatically and immediately be due and payable. Cumulative. Exercise any rights and remedies as provided under the Note and other Loan Documents, or as provided by law or equity.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and other Loan Documents shall be valid unless in writing and signed by an officer of Bank. No waiver by Bank of any Default shall operate as a waiver of any other Default or the same Default on a future occasion. Neither the failure nor any delay on the part of Bank in exercising any right, power, or remedy under this Note and other Loan Documents shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

Except to the extent otherwise provided by the Loan Documents or prohibited by law, Borrower and any other person liable under this Note waives presentment, protest, notice of dishonor, demand for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and all other notices of any kind. Further, each agrees that Bank may (i) extend, modify or renew this Note or make a novation of the loan evidenced by this Note, and/or (ii) grant releases, compromises or indulgences with respect to any collateral securing this Note, or with respect to Borrower or other person liable under this Note or any other Loan Documents, all without notice to or consent of Borrower and other such person, and without affecting the liability of Borrower and other such person; provided, Bank may not extend, modify or renew this Note or make a novation of the loan evidenced by this Note without the consent of Borrower.

MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. Bank’s interests in and rights under this Note and the other Loan Documents are freely assignable, in whole or in part, by Bank. In addition, nothing in this Note or any of the other Loan Documents shall prohibit Bank from pledging or assigning this Note or any of the other Loan Documents or any interest therein to any Federal Reserve Bank. Borrower shall not assign its rights and interest hereunder without the prior written consent of Bank, and any attempt by Borrower to assign without Bank’s prior written consent is null and void. Any assignment shall not release Borrower from the Obligations. Applicable Law; Conflict Between Documents. This Note and, unless otherwise provided in any other Loan Document, the other Loan Documents shall be governed by and construed under the laws of the state named in Bank’s address on the first page hereof without regard to that state’s conflict of

-4-

laws principles. If the terms of this Note should conflict with the terms of any loan agreement or any commitment letter that survives closing, the terms of this Note shall control. Borrower’s Accounts. Except as prohibited by law, Borrower grants Bank a security interest in all of Borrower’s accounts with Bank and any of its affiliates. Swap Agreements. All swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time), if any, between Borrower and Bank or its affiliates are independent agreements governed by the written provisions of said swap agreements, which will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of this Note, except as otherwise expressly provided in said written swap agreements, and any payoff statement from Bank relating to this Note shall not apply to said swap agreements unless expressly referred to in such payoff statement. Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state named in Bank’s address on the first page hereof. Severability. If any provision of this Note or of the other Loan Documents shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or other such document. Notices. Any notices to Borrower shall be sufficiently given, if in writing and mailed or delivered to the Borrower’s address shown above or such other address as provided hereunder, and to Bank, if in writing and mailed or delivered to Wachovia Bank, National Association, 12 East 49^th Street, 42^nd Floor, New York, New York 10017 or such other address as Bank may specify in writing from time to time. Notices to Bank must include the mail code. In the event that Borrower changes Borrower’s address at any time prior to the date the Obligations are paid in full, Borrower agrees to promptly give written notice of said change of address by registered or certified mail, return receipt requested, all charges prepaid. Plural; Captions. All references in the Loan Documents to Borrower, guarantor, person, document or other nouns of reference mean both the singular and plural form, as the case may be, and the term “person” shall mean any individual, person or entity. The captions contained in the Loan Documents are inserted for convenience only and shall not affect the meaning or interpretation of the Loan Documents. Advances. Bank may, in its sole discretion, make other advances which shall be deemed to be advances under this Note, even though the stated principal amount of this Note may be exceeded as a result thereof. Posting of Payments. All payments received during normal banking hours after 2:00 p.m. local time at the office of Bank first shown above shall be deemed received at the opening of the next banking day. Joint and Several Obligations. If there is more than one Borrower, each is jointly and severally obligated. Fees and Taxes. Borrower shall promptly pay all documentary, intangible recordation and/or similar taxes on this transaction whether assessed at closing or arising from time to time. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. Patriot Act Notice. To help fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. For purposes of this section, account shall be understood to include loan accounts. FINAL AGREEMENT. This Note and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE

-5-

EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has caused this Note to be executed under seal.

CLAVERACK HOUSING VENTURES, LLC
By:	Wellsford Real Properties, Inc. Managing Member
	By:	/s/ William H. Darrow
		Name:    William H. Darrow II Title:    Vice President

-6-

EX-10

RETURN TO: John P. Uehlinger, Esq.
Emmet, Marvin & Martin, LLP
120 Broadway
New York, New York 10271

BUILDING LOAN MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT

This BUILDING LOAN MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (hereafter referred to as “Mortgage”) made as of December 15, 2005, by and between, Claverack Housing Ventures, LLC, whose address is c/o Wellsford Real Properties, Inc., 535 Madison Avenue, 26th Floor, New York, New York 10022 (“Mortgagor”) and Wachovia Bank, National Association, a national banking association, whose address is 12 East 49th Street, 42nd Floor, New York, New York 10017 (“Bank”).

W I T N E S S E T H :

        To secure payment and performance of obligations under a Building Loan Agreement dated the date hereof between Mortgagor and the Bank (the “Building Loan Agreement”) and under a Building Loan Mortgage Note (the “Note”) dated the date hereof, in the amount of $1,623,372.87, made by Mortgagor payable to Bank, this Mortgage, any present or future Letters of Credit issued by Bank for the account of Mortgagor, other loan documents as defined in the Note (the “Loan Documents”), and swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Bank or any of its affiliates and Mortgagor, all other indebtedness of Mortgagor to Bank whenever borrowed or incurred, and any renewals, extensions, novations, or modifications of the foregoing (collectively the “Obligations”), and in consideration of these premises and for other consideration, Mortgagor does mortgage, grant and convey unto Bank (for itself and its affiliates), its successors and assigns, all of Mortgagor’s right, title and interest now owned or hereafter acquired in and to each of the following (collectively, the “Property”): (i) all those certain tracts of land in the Town of Claverack, County of Columbia, State of New York described in EXHIBIT A attached hereto and made part hereof (the “Land”); (ii) all buildings and improvements now or hereafter erected on the Land; (iii) all fixtures, machinery, equipment and other articles of real, personal or mixed property attached to, situated or installed in or upon, or used in the operation or maintenance of, the Land or any buildings or improvements situated thereon, whether or not such real, personal or mixed property is or shall be affixed to the Land; (iv) all building materials, building machinery and building equipment delivered on site to the Land during the course of, or in connection with, any construction, repair or renovation of the buildings and improvements situated or to be situated thereon; (v) any leases, licenses or occupancy agreements of all or any part of the Land and all extensions, renewals, and modifications thereof, and any options, rights of first refusal or guarantees relating thereto; all rents, income, revenues, security deposits, issues, profits, awards and payments of any kind payable under any leases or otherwise arising from the Land; (vi) all contract rights, accounts receivable and general intangibles relating to the Land or the use, occupancy, maintenance, construction, repair or operation thereof; all management agreements, franchise agreements, utility agreements and deposits; all maps, plans, surveys and specifications; all warranties and guaranties; all permits, licenses and approvals; and all insurance policies; (vii) all estates, rights, tenements, hereditaments, privileges, easements, and appurtenances of any kind benefiting the Land; all means of access to and from the Land, whether public or private; and all water and mineral rights; and (viii) all “Proceeds” of any of the above-described property, which term shall have the meaning given to it in the Uniform Commercial Code of the jurisdiction where this Mortgage is recorded (the “UCC”), whether cash or non-cash, and including

insurance proceeds and condemnation awards; and all replacements, substitutions and accessions thereof.

        In the event that Mortgagor is the owner of a leasehold estate with respect to any portion of the Property and Mortgagor obtains a fee estate in such portions of the Property, then, such fee estate shall automatically, and without further action of any kind on the part of the Mortgagor, be and become subject to the security title and lien of this Agreement.

        TO HAVE AND TO HOLD the Property and all the estate, right, title and interest, in law and in equity, of Mortgagor’s in and to the Property unto Bank, its successors and assigns, forever.

        Mortgagor WARRANTS AND REPRESENTS that Mortgagor is lawfully seized of the Property, in fee simple, absolute, that Mortgagor has the legal right to convey and encumber the same, and that the Property is free and clear of all liens and encumbrances. Mortgagor further warrants and will forever defend all and singular the Property and title thereto to Bank and Bank’s successors and assigns, against the lawful claims of all persons whomsoever.

        PROVIDED ALWAYS that if (i) all the Obligations (including without limitation, all termination payments and any other amounts due under or in connection with any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) secured hereunder) are paid in full, (ii) each and every representation, warranty, agreement, covenant and condition of this Mortgage, and the other Loan Documents, are complied with and abided by, and (iii) any and all swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) secured hereunder have matured or been terminated, then this Mortgage and the estate hereby created shall cease and be null, void, and canceled of record.

        To protect the security of this Mortgage, Mortgagor further represents and agrees with Bank as follows:

        Payment of Obligations. That the Obligations shall be timely paid and performed.

        Future Advances. This Mortgage is given to secure not only existing Obligations, but also future advances, including obligations under swap agreements made, and future swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) entered into with Bank or any of its affiliates, in each case only to the extent relating to the Loan within 20 years of the date of this Mortgage to the same extent as if such future advances and swap agreements are made on the date of the execution of this Mortgage. The principal amount that may be so secured may decrease or increase from time to time, but the total amount so secured at any one time shall not exceed $1,627,070, plus all interest, costs, reimbursements, fees and expenses due under this Mortgage and secured hereby. Mortgagor shall not execute any document that impairs or otherwise impacts the priority of any existing or future Obligations secured by this Mortgage.

        Advances Held in Trust. Mortgagor agrees, in compliance with New York Lien Law, to receive advances secured by this Mortgage and to hold any right to receive advances secured by this Mortgage as a trust fund to be applied first to payment of the cost of any improvement to the Property before using any part of the total advances for any other purpose.

        Grant of Security Interest in Personal Property. This Mortgage constitutes a security agreement under the UCC and shall be deemed to constitute a fixture financing statement. Mortgagor hereby grants a security interest in any personal property included in the Property. On request of Bank, Mortgagor will execute one or more Financing Statements in form satisfactory to Bank and will pay all costs and expenses of filing the same in all public filing offices, where filing is deemed desirable by Bank. Bank is authorized to file Financing Statements relating to the Property without Mortgagor’s signature where permitted by law.

Nothing herein obligates Bank to provide credit in excess of the Obligations.

Page 2

        Leases, Subleases and Easements. Mortgagor shall maintain, enforce and cause to be performed all of the terms and conditions under any lease, sublease or easement which may constitute a portion of the Property. With reference to the Real Property Law of New York § 291-f Mortgagor shall not, without the consent of Bank, enter into any new lease of all or any portion of the Property, agree to the cancellation or surrender under any lease of all or any portion of the Property, agree to prepayment of rents, issues or profits (other than rent paid at the signing of a lease or sublease), modify any such lease so as to shorten the term, decrease the rent, accelerate the payment of rent, or change the terms of any renewal option; and any such purported new lease, cancellation, surrender, prepayment or modification made without the consent of Bank shall be void as against Bank.

        Required Insurance. Mortgagor shall maintain with respect to the Property: (i) during construction of any improvements on the Property, “all-risk” builders risk insurance which must include windstorm, hail damage, fire and vandalism (non-reporting Completed Value with Special Cause of Loss form), in an amount not less than the completed replacement value of the improvements under construction, naming Bank as mortgagee and loss payee; (ii) upon completion of construction, upon occupancy of any improvements, and at all other times, insurance against loss or damage by fire and other casualties and hazards by insurance written on an “all risks” basis, including malicious mischief coverage, in an amount not less than the replacement cost thereof, including coverage for loss of rents or business interruption if applicable, naming Bank as loss payee and mortgagee; (iii) if the Property is required to be insured pursuant to the National Flood Reform Act of 1994, and the regulations promulgated thereunder, flood insurance is required in the amount equal to the lesser of the loan amount or maximum available under the National Flood Insurance Program, but in no event should the amount of coverage be less than the value of the improved structure, naming Bank as mortgagee and loss payee. If, after closing, the Property (or any part thereof) is remapped and if the vertical improvements are determined to be located in a special flood hazard area, Mortgagor must obtain and maintain a flood insurance policy. If, within forty-five (45) days of receipt of notification from Bank that the Property has been reclassified by FEMA as being located in a special flood hazard area, Mortgagor has not provided sufficient evidence of flood insurance, Bank is mandated under federal law to purchase flood insurance on behalf of Mortgagor, and Bank will add the associated costs to the principal balance of the Note. If the land or any portion thereof is located in a special flood hazard area, this Agreement may be terminated by Bank at its sole option; (iv) as applicable, insurance which complies with the workers’ compensation and employers’ liability laws of all states in which Mortgagor shall be required to maintain such insurance; and (v) liability insurance providing coverage in such amount as Bank may require but in no event less than $1,000,000.00 combined single limit, naming Bank as an additional insured; and (vi) such other insurance as Bank may require from time to time, provided such insurance is customary for projects such as the Project.

        All property insurance policies shall contain an endorsement or agreement by the insurer in form satisfactory to Bank that any loss shall be payable in accordance with the terms of such policy notwithstanding any act or negligence of Mortgagor and the further agreement (within both the property and liability policies) of the insurer waiving rights of subrogation against Bank, and rights of set-off, counterclaim or deductions against Mortgagor.

        All insurance policies shall be in form, provide coverages, be issued by companies and be in amounts satisfactory to Bank. At least 30 days prior to the expiration of each such policy, Mortgagor shall furnish Bank with evidence satisfactory to Bank that such policy has been renewed or replaced or is no longer required hereunder. All such policies shall provide that the policy will not be canceled or materially amended without at least 30 days prior written notice to Bank. In the event Mortgagor fails to provide, maintain, keep in force, and furnish to Bank the policies of insurance required by this paragraph, Bank may procure such insurance or single-interest insurance in such amounts, at such premium, for such risks and by such means as Bank chooses, at Mortgagor’s expense; provided however, Bank shall have no responsibility to obtain any insurance, but if Bank does obtain insurance, Bank shall have no responsibility to assure that the insurance obtained shall be adequate or provide any protection to Mortgagor.

Page 3

        Insurance Proceeds. After occurrence of any loss to any of the Property, Mortgagor shall give prompt written notice thereof to Bank.

        In the event of such loss all insurance proceeds, including unearned premiums, shall be payable to Bank, and Mortgagor hereby authorizes and directs any affected insurance company to make payment of such proceeds directly to Bank and not to Bank and Mortgagor jointly. Bank is hereby authorized by Mortgagor to make proof of loss if not promptly made by Mortgagor, settle, adjust or compromise any claims for loss or damage under any policy or policies of insurance and Mortgagor appoints Bank as its attorney-in-fact to receive and endorse any insurance proceeds to Bank, which appointment is coupled with an interest and shall be irrevocable as long as any Obligations remain unsatisfied, but shall only be exercised by Bank if a Default has occurred and is continuing hereunder. Mortgagor shall pay the costs of collection, including attorneys’ fees, of insurance proceeds payable on account of such damage or destruction. Mortgagor shall have no claim against the insurance proceeds, or be entitled to any portion thereof, and all rights to the insurance proceeds are hereby assigned to Bank as security for payment of the Obligations.

        In the event of any damage to or destruction of the Property, Bank shall have the option of applying or paying all or part of the insurance proceeds to (i) the Obligations in such order as Bank may determine, (ii) restoration, replacement or repair of the Property in accordance with Bank’s standard construction loan disbursement conditions and requirements, or (iii) Mortgagor. Nothing herein shall be deemed to excuse Mortgagor from restoring, repairing and maintaining the Property as required herein.

        Notwithstanding the foregoing, provided that all of the following conditions are fully satisfied by Mortgagor, Bank shall disburse insurance proceeds for repair and restoration of the Property in accordance with Bank’s standard construction loan disbursement conditions and requirements: (i) no Default or event which, with the giving of notice or the passage of time, or both, would constitute a Default shall have occurred; (ii) Mortgagor shall have delivered evidence satisfactory to Bank that the Property can be fully repaired and restored at least six (6) months prior to the maturity of the Obligations; (iii) no lease of the Property is cancelable or terminable by the tenant or Mortgagor on account of the casualty or, if it is, the tenant or Mortgagor (as applicable) has waived in writing its right to cancel; (iv) the work is performed either under the existing construction contracts or, if the work required is not subject to any existing contract, under a contract satisfactory to Bank in accordance with plans and specifications and a budget satisfactory to Bank in accordance with all legal requirements; (v) Mortgagor shall have deposited with Bank for disbursement in the connection with the restoration the greater of: (A) the applicable deductible under the insurance policies covering the loss; or (B) the amount by which the cost of restoration of the Property to substantially the same value, condition and character as existed prior to such damage is estimated by Bank to exceed the net insurance proceeds; (vi) Mortgagor has paid as and when due all of Bank’s costs and expenses incurred in connection with the collection and disbursement of insurance proceeds, including without limitation, inspection, monitoring, engineering and legal fees (and if not paid on demand, at Bank’s option, such costs may be deducted from the disbursements made by Bank or added to the sums secured by this Mortgage); and (vii) such other terms and conditions as Bank may reasonably require.

        Minimum Standards. In addition to the requirements set forth in the Loan Documents, all surveys, insurance, title policies, construction documents, environmental reports, payment and performance bonds, and any other due diligence or additional documents required in connection with this Loan, shall comply with Bank’s minimum standards in place from time to time for such documents, which shall be provided in writing by Bank to Borrower upon request.

        Impositions; Escrow Deposit. Mortgagor will pay all taxes, levies, assessments and other fees and charges imposed upon or which may become a lien upon the Property under any law or ordinance (all of the foregoing collectively “Impositions”) before they become delinquent and in any event in the same calendar year in which they first become due. Upon request of Bank, if a Default has occurred and is continuing hereunder, Mortgagor shall add to each periodic payment required under the Note the amount estimated by Bank to be sufficient to enable Bank to pay, as they come due, all Impositions and insurance premiums which Mortgagor is required to pay hereunder. Payments requested under this

Page 4

provision shall be supplemented or adjusted as required by Bank from time to time. Such funds may be commingled with the general funds of Bank and shall not earn interest. Upon the occurrence and during the continuance of a Default, Bank may apply such funds to pay any of the Obligations.

        Use of Property. Mortgagor shall use and operate, and require its lessees or licensees to use and operate, the Property in compliance with all applicable laws (including, for example, the Americans with Disabilities Act and the Fair Housing Act) and ordinances, covenants, and restrictions, and with all applicable requirements of any lease or sublease now or hereafter affecting the Property. Mortgagor shall not permit any unlawful use of the Property or any use that may give rise to a claim of forfeiture of any of the Property. Mortgagor shall not allow changes in the stated use of Property from that disclosed to Bank at the time of execution hereof. Mortgagor shall not initiate or acquiesce to a zoning change of the Property without prior notice to, and written consent of, Bank.

        Maintenance, Repairs and Alterations. Mortgagor shall keep and maintain the Property in good condition and repair and fully protected from the elements to the satisfaction of Bank. Mortgagor will not remove, demolish or structurally alter any of the buildings or other improvements on the Property (except such alterations as may be required by laws, ordinances or regulations) without the prior written consent of Bank. Mortgagor shall promptly notify Bank in writing of any material loss, damage or adverse condition affecting the Property.

        Eminent Domain. Should the Property or any interest therein be taken or damaged by reason of any public use or improvement or condemnation proceeding (“Condemnation”), or should Mortgagor receive any notice or other information regarding such Condemnation, Mortgagor shall give prompt written notice thereof to Bank. Bank shall be entitled to all compensation, awards and other payments or relief granted in connection with such Condemnation and, at its option, may commence, appear in and prosecute in its own name any action or proceedings relating thereto. Bank shall be entitled to make any compromise or settlement in connection with such taking or damage. All compensation, awards, and damages awarded to Mortgagor related to any Condemnation (the “Proceeds”) are hereby assigned to Bank and Mortgagor agrees to execute such further assignments of the Proceeds as Bank may require. Bank shall have the option of applying or paying the Proceeds in the same manner as insurance proceeds as provided herein. Mortgagor appoints Bank as its attorney-in-fact to receive and endorse the Proceeds to Bank, which appointment is coupled with an interest and shall be irrevocable as long as any Obligations remain unsatisfied, but shall only be exercised by Bank after a Default has occurred and is continuing hereunder.

        Environmental Condition of Property and Indemnity. Mortgagor warrants and represents to Bank, except as reported by Mortgagor to Bank in writing or as disclosed in environmental reports delivered to Bank, that: (i) Mortgagor has inspected and is familiar with the environmental condition of the Property; (ii) the Property and Mortgagor, and any occupants of the Property, are in compliance with and shall continue to be in compliance with all applicable federal, state and local laws and regulations intended to protect the environment and public health and safety as the same may be amended from time to time (“Environmental Laws”); (iii) the Property is not and has never been used to generate, handle, treat, store or dispose of, in any quantity, oil, petroleum products, hazardous or toxic substances, hazardous waste, regulated substances or hazardous air pollutants (“Hazardous Materials”) in violation of any Environmental Laws; (iv) no Hazardous Materials (including asbestos, mold or lead paint in any form) are located on or under the Property or emanate from the Property; (v) there are no unregistered underground storage tanks on the Property that are subject to any underground storage tank registration laws or regulations; (vi) no notice has been received with regard to any Hazardous Material on the Property; (vii) no action, investigation or proceeding is pending or to Mortgagor’s knowledge threatened which seeks to enforce any right or remedy against Mortgagor or the Property under any Environmental Law; and (viii) all licenses, permits and other governmental or regulatory actions necessary for the Property to comply with Environmental Laws shall be obtained and maintained and Mortgagor shall assure compliance therewith.

        Further, Mortgagor represents to Bank that no portion of the Property is a protected wetland except as otherwise shown on the survey delivered to Bank in connection with the Loan. Mortgagor

Page 5

agrees to notify Bank immediately upon receipt of any citations, warnings, orders, notices, consent agreements, process or claims alleging or relating to violations of any Environmental Laws or to the environmental condition of the Property and shall conduct and complete all investigations and all cleanup actions necessary to comply with the Environmental Laws and to remove, in accordance with Environmental Laws, any Hazardous Material from the Property.

        Mortgagor shall indemnify, hold harmless, and defend Bank from and against any and all damages, penalties, fines, claims, suits, liabilities, costs, judgments and expenses, including attorneys’, consultants’ or experts’ fees of every kind and nature incurred, suffered by or asserted against Bank as a direct or indirect result of: (i) representations made by Mortgagor in this Section being or becoming untrue in any material respect; (ii) Mortgagor’s violation of or failure to meet the requirements of any Environmental Laws; or (iii) Hazardous Materials which, while the Property is subject to this Mortgage, exist on the Property. Bank shall have the right to arrange for or conduct environmental inspections of the Property from time to time (including the taking of soil, water, air or material samples). The cost of such inspections made after Default or which are required by laws or regulations applicable to Bank shall be borne by Mortgagor. However, Mortgagor’s indemnity shall not apply to any acts or omissions of Bank or any events taking place after foreclosure or satisfaction of this Mortgage. Except as provided in the next sentence, these indemnification obligations are in addition to General Indemnification provisions set forth hereafter. Mortgagor’s Obligations under this section shall continue, survive and remain in full force and effect notwithstanding the repayment of the Obligations, a foreclosure of or exercise of power of sale under this instrument, a delivery of a deed in lieu of foreclosure, a cancellation or termination of record of this instrument and the transfer of the Property. Notwithstanding anything to the contrary in this Mortgage or in the other Loan Documents, Borrower’s liability, obligations and indemnifications relating to Hazardous Material shall terminate two (2) years after the repayment in full of the Loan provided that prior to the expiration of said two (2) year period, neither Guarantor, Borrower nor the Bank has knowledge of or received notice with respect to (i) Hazardous Material on the Property, (ii) any action, investigation or proceeding commenced or threatened relating to Hazardous Material alleged to be on the Property, or (iii) any alleged violation by Borrower of any Environmental Law.

        Appraisals. Mortgagor agrees that Bank may obtain an appraisal of the Property when required by the regulations of the Federal Reserve Board or the Office of the Comptroller of the Currency, any other regulatory agency or at such other times as Bank may reasonably require. Such appraisals shall be performed by an independent third party appraiser selected by Bank. The cost of such appraisals shall be borne by Mortgagor. If requested by Bank, Mortgagor shall execute an engagement letter addressed to the appraiser selected by Bank. Mortgagor’s failure or refusal to sign such an engagement letter, however, shall not impair Bank’s right to obtain such an appraisal. Mortgagor agrees to pay the cost of such appraisal within 10 days after receiving an invoice for such appraisal.

        Inspections. Bank, or its representatives or agents, are authorized to enter at any reasonable time upon any part of the Property for the purpose of inspecting the Property and for the purpose of performing any of the acts it is authorized to perform under the terms of this Mortgage.

        Liens and Subrogation. Mortgagor shall pay and promptly discharge all liens, claims and encumbrances upon the Property that exceed $5,000 in the aggregate (but liens of a value of $5,000 or less must be affirmatively insured by the title company if same are not bonded or released). Mortgagor shall have the right to contest in good faith the validity of any such lien, claim or encumbrance, provided: (i) such contest suspends the collection thereof or there is no danger of the Property being sold or forfeited while such contest is pending; (ii) Mortgagor first deposits with Bank a bond or other security satisfactory to Bank in such amounts as Bank shall reasonably require; and (iii) Mortgagor thereafter diligently proceeds to cause such lien, claim or encumbrance to be removed and discharged.

        Bank shall be subrogated to any liens, claims and encumbrances against Mortgagor or the Property that are paid or discharged through payment by Bank or with loan proceeds, notwithstanding the record cancellation or satisfaction thereof.

        Waiver of Mortgagor’s Rights. To the fullest extent permitted by law, Mortgagor waives the

Page 6

benefit of all laws now existing or that hereafter may be enacted providing for (i) any appraisement before sale of any portion of the Property, (ii) in any way extending the time for the enforcement of the collection of the Note or the debt evidenced thereby or any of the other Obligations, and any rights to hearing prior to the exercise by Bank of any right, power, or remedy herein provided to Bank.

        To the full extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim or seek to take the benefit or advantage of any law now or hereafter in force providing for any exemption (including homestead exemption), appraisement, valuation, stay, extension or redemption, and Mortgagor for themselves and their respective heirs, devisees, representatives, successors and assigns, and for any and all persons claiming any interest in the Property, to the extent permitted by law, hereby waive and release all rights of valuation, appraisement, redemption, stay of execution, the benefit of all exemption laws, notice of election to mature or declare due the whole of the secured indebtedness and marshalling in the event of foreclosure of the liens hereby created. Mortgagor further waives any and all notices including, without limitation, notice of intention to accelerate and of acceleration of the Obligations, except to the extent expressly provided for herein.

        Payments by Bank. In the event of default in the timely payment or performance of any of the Obligations, Bank, at its option and without any duty on its part to determine the validity or necessity thereof, may pay the sums for which Mortgagor is obligated. Further, Bank may pay such sums as Bank deems appropriate for the protection and maintenance of the Property including, without limitation, sums to pay Impositions and other levies, assessments or liens, maintain insurance, make repairs, secure the Property, maintain utility service, intervene in any condemnation and pay attorneys’ fees and other fees and costs to enforce this Mortgage or protect the lien hereof (including foreclosure) or collect the Obligations, without limitation, including those incurred in any proceeding including Bankruptcy or arbitration. Any amounts so paid shall bear interest at the default rate stated in the Note and shall be secured by this Mortgage.

        Indemnification. Mortgagor shall protect, indemnify and save harmless Bank from and against all losses, liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Damages”) imposed upon, incurred by or asserted against Bank on account of (i) the Loan Documents or any failure or alleged failure of Mortgagor to comply with any of the terms or representations of this Agreement; (ii) any claim of loss or damage to the Property or any injury or claim of injury to, or death of, any person or property that may be occasioned by any cause whatsoever pertaining to the Property or the use, occupancy or operation thereof, (iii) any failure or alleged failure of Mortgagor to comply with any law, rule or regulation applicable to the Property or the use, occupancy or operation of the Property (including, without limitation, the failure to pay any taxes, fees or other charges), provided that such indemnity shall be effective only to the extent of any Damages that may be sustained by Bank in excess of any net proceeds received by it from any insurance of Mortgagor (other than self-insurance) with respect to such Damages, (iv) any Damages whatsoever by reason of any alleged action, obligation or undertaking of Bank relating in any way to or any matter contemplated by the Loan Documents, (v) any claim for brokerage fees or such other commissions relating to the Property or any other Obligations, or (vi) any and all liability arising from any leases related to the Property. Nothing contained herein shall require Mortgagor to indemnify Bank for any Damages resulting from Bank’s gross negligence or its willful and wrongful acts. The indemnity provided for herein shall survive payment of the Obligations and shall extend to the officers, directors, employees and duly authorized agents of Bank. In the event the Bank incurs any Damages arising out of or in any way relating to the transaction contemplated by the Loan Documents (including any of the matters referred to in this section), the amounts of such Damages shall be added to the Obligations, shall bear interest, to the extent permitted by law, at the interest rate borne by the Obligations from the date incurred until paid and shall be payable on demand.

        Assignment of Rents. Mortgagor hereby absolutely assigns and transfers to Bank all the leases, rents, issues and profits of the Property (collectively “Rents”). Although this assignment is effective immediately, so long as no Default exists, Bank gives to and confers upon Mortgagor the privilege under a revocable license to collect as they become due, but not prior to accrual, the Rents and to demand, receive and enforce payment, give receipts, releases and satisfactions, and sue in the name

Page 7

of Mortgagor for all such Rents. Mortgagor represents there has been no prior assignment of leases or Rents, and agrees not to further assign such leases or Rents. Upon any occurrence of Default, the license granted to Mortgagor herein shall be automatically revoked without further notice to or demand upon Mortgagor, and Bank shall have the right, in its discretion, without notice, by agent or by a receiver appointed by a court, and without regard to the adequacy of any security for the Obligations, (i) to enter upon and take possession of the Property, (ii) notify tenants, subtenants and any property manager to pay Rents to Bank or its designee, and upon receipt of such notice such persons are authorized and directed to make payment as specified in the notice and disregard any contrary direction or instruction by Mortgagor, and (iii) in its own name, sue for or otherwise collect Rents, including those past due, and apply Rents, less costs and expenses of operation and collection, including reasonable attorneys’ fees, to the Obligations in such order and manner as Bank may determine or as otherwise provided for herein. Bank’s exercise of any one or more of the foregoing rights shall not cure or waive any Default or notice of Default hereunder.

        Due on Sale or Further Encumbrance or Transfer of an Interest in Mortgagor. Except as set forth in the “Partial Releases” Clause below, without the prior written consent of Bank in each instance, Mortgagor shall not (i) sell, convey, transfer or encumber the Property, or any part thereof or interest therein, whether legal or equitable, (ii) cause or permit any transfer of the Property or any part thereof, whether voluntarily, involuntarily or by operation of law, or (iii) enter into any agreement or transaction to transfer, or accomplish in form or substance a transfer, of the Property unless the Loan will be paid in full as a result thereof. A “transfer” of the Property excludes (A) any permitted transfer pursuant to the “Partial Releases” clause below and (B) the entering into a contract of sale for a Home or a Lot as permitted by the Building Loan Agreement and, unless the Loan is paid in full as a result of such transfer, includes: (a) the direct or indirect sale, transfer or conveyance of the Property or any portion thereof or interest therein; (b) the execution of an installment sale contract or similar instrument affecting all or any portion of the Property; (c) if Mortgagor is a corporation, partnership, limited liability company, trust or other business entity, the transfer (whether in one transaction or a series of transactions) of any stock, partnership, limited liability company or other ownership interests in such corporation, partnership, limited liability company or entity including, without limitation, changes in stockholders, partners, members, managers, trustees, beneficiaries, or their respective interests; (d) if Mortgagor is a corporation, the creation or issuance of new stock by which an aggregate of more than 10% of such corporation’s stock shall be vested in a party or parties who are not now stockholders; and (e) an agreement by Mortgagor leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of or the grant of a security interest in and to any Leases. Notwithstanding anything to the contrary contained in the foregoing clauses (a) through (e), “transfer” shall not include (i) a transfer of a controlling interest in the Borrower pursuant to the buy-sell provisions of the LLC Agreement of the Borrower (provided that notice thereof shall be given to the Bank); (ii) a transfer of a non-controlling interest in the Borrower and (iii) a transfer of any of the stock of the managing member of the Borrower, so long as Jeffrey Lynford continues to either be the Chief Executive Officer of the managing member of the Borrower or hold a senior position in the managing member of the Borrower holding decision making authority with respect to the Project.

        Partial Releases. After all of the following conditions have been satisfied, Bank shall, upon Borrower’s request, release a Home or Lot from the lien of the Building Loan Mortgage and the Acquisition Loan Mortgage:

(i) no Default under this Agreement or the other Loan Documents shall then exist and be continuing;

(ii) Bank shall have received a fully executed counterpart of the contract of sale for such Home or Lot, which contract of sale shall specify a sales price of not less than the Minimum Release Price and which shall otherwise be reasonably acceptable to the Bank;

(iii) Borrower shall notify Bank and Bank’s counsel not later than five (5) business days prior to any closing of such Home or Lot of (i) the proposed closing date and (ii) the amount of the Release Consideration to be paid to Bank on such date; and

Page 8

(iv) Bank shall have received the Release Consideration for the Home or Lot to be released, which Release Consideration shall be paid to the Bank in immediately available funds, either by wire transfer in accordance with wiring instructions provided by Bank or by delivery to Bank’s representative at the closing of a bank or bank-certified check drawn on or certified by a bank having offices in New York City payable to the order of the Bank in the amount of the Release Consideration for such Home or Lot.

        Remedies of Bank on Default. Failure of Mortgagor or any other person liable to timely pay or perform any of the Obligations after the expiration of any applicable notice, grace or cure period is a default (“Default”) under this Mortgage. Upon the occurrence of Default the following remedies are available, without limitation, to Bank: (i) Bank may exercise any or all of Bank’s remedies under this Mortgage or other Loan Documents including, without limitation, acceleration of the maturity of all payments and Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) with Bank or any of its affiliates, which shall be due in accordance with and governed by the provisions of said swap agreements; (ii) Bank may take immediate possession of the Property or any part thereof in accordance with applicable law (which Mortgagor agrees to surrender to Bank) and manage, control or lease the same to such persons and at such rental as it may deem proper and collect and apply Rents to the payment of: (a) the Obligations, together with all costs and attorneys’ fees; (b) all Impositions and any other levies, assessments or liens which may be prior in lien or payment to the Obligations, and premiums for insurance, with interest on all such items; and (c) the cost of all alterations, repairs, replacements and expenses incident to taking and retaining possession of the Property and the management and operation thereof; all in such order or priority as Bank in its sole discretion may determine. The taking of possession shall not prevent concurrent or later proceedings for the foreclosure sale of the Property; (iii) Bank may apply to any court of competent jurisdiction for the appointment of a receiver for all purposes including, without limitation, to manage and operate the Property or any part thereof, and to apply the Rents therefrom as hereinabove provided. In the event of such application, Mortgagor consents to the appointment of a receiver, and agrees that a receiver may be appointed without notice to Mortgagor, without regard to whether Mortgagor has committed waste or permitted deterioration of the Property, without regard to the adequacy of any security for the Obligations, and without regard to the solvency of Mortgagor or any other person, firm or corporation who or which may be liable for the payment of the Obligations; (iv) Bank may exercise all the remedies of a mortgagee as provided by law and in equity including, without limitation, foreclosure upon this Mortgage and sale of the Property, or any part of the Property, at public sale conducted according to applicable law (referred to as “Sale”) and conduct additional Sales as may be required until all of the Property is sold or the Obligations are satisfied; (v) with respect to any portion of the Property governed by the UCC, Bank shall have all of the rights and remedies of a secured party thereunder. Bank may elect to foreclose upon any Property that is fixtures under law applicable to foreclosure of interests in real estate or law applicable to personal property; (vi) Bank may bid at Sale and may accept, as successful bidder, credit of the bid amount against the Obligations as payment of any portion of the purchase price; and (vii) Bank shall apply the proceeds of Sale, first to any fees or attorney fees permitted Bank by law in connection with Sale, second to expenses of foreclosure, publication, and sale permitted Bank by law in connection with Sale, third to the Obligations, and any remaining proceeds as required by law.

        Miscellaneous Provisions. Mortgagor agrees to the following: (i) All remedies available to Bank with respect to this Mortgage or available at law or in equity shall be cumulative and may be pursued concurrently or successively. No delay by Bank in exercising any remedy shall operate as a waiver of that remedy or of any Default. Any payment by Bank or acceptance by Bank of any partial payment shall not constitute a waiver by Bank of any Default; (ii) Mortgagor represents that Mortgagor (a) is (1) an adult individual and is sui juris, or (2) a corporation, general partnership, limited partnership, limited liability company or other legal entity, duly organized, validly existing and in good standing under the laws of its state of organization, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such organization (b) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (c) has the power and authority to execute, deliver and perform, and by all necessary action has authorized the execution, delivery and performance of, all of its obligations under this Mortgage and any other Loan Document to which it is a party. (iii) The provisions hereof shall be

Page 9

binding upon and inure to the benefit of Mortgagor, its heirs, personal representatives, successors and assigns including, without limitation, subsequent owners of the Property or any part thereof, and shall be binding upon and inure to the benefit of Bank, its successors and assigns and any future holder of the Note or other Obligations; (iv) Any notices, demands or requests shall be sufficiently given Mortgagor if in writing and mailed or delivered to the address of Mortgagor shown above or to another address as provided herein and to Bank if in writing and mailed or delivered to Wachovia Bank, National Association, 12 East 49^th Street, 42^nd Floor, New York, New York 10017, or such other address as Bank may specify from time to time and in the event that Mortgagor changes Mortgagor’s address at any time prior to the date the Obligations are paid in full, that party shall promptly give written notice of such change of address by registered or certified mail, return receipt requested, all charges prepaid. Notices to Bank must include the mail code. (v) This Mortgage may not be changed, terminated or modified orally or in any manner other than by an instrument in writing signed by the parties hereto; (vi) The captions or headings at the beginning of each paragraph hereof are for the convenience of the parties and are not a part of this Mortgage; (vii) If the lien of this Mortgage is invalid or unenforceable as to any part of the Obligations, the unsecured portion of the Obligations shall be completely paid (and all payments made shall be deemed to have first been applied to payment of the unsecured portion of the Obligations) prior to payment of the secured portion of the Obligations and if any clause, provision or obligation hereunder is determined invalid or unenforceable the remainder of this Mortgage shall be construed and enforced as if such clause, provision or obligation had not been contained herein; (viii) This Mortgage shall be governed by and construed under the laws of the jurisdiction where this Mortgage is recorded; (ix) Mortgagor by execution and Bank by acceptance of this Mortgage agree to be bound by the terms and provisions hereof). FINAL AGREEMENT. This Agreement and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

        IN WITNESS WHEREOF, Mortgagor has signed and sealed this instrument as of the day and year first above written.

Mortgagor CLAVERACK HOUSING VENTURES, LLC
By:	Wellsford Real Properties, Inc. Managing Member
	By:	/s/ William H. Darrow
		Name:   William H. Darrow II Title:   Vice President

Page 10

Acknowledgement

State of New York	)
County of New York	) ss:

        On the 14th day of December in the year 2005, before me, the undersigned, a Notary Public in and for said State, personally appeared William H. Darrow II personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

        In witness whereof I hereunto set my hand.

/s/ Jolyn S. Kitzer, Notary Public

Jolyn S. Kitzer (Printed Name of Notary)

My Commission Expires: August 30, 2008

EXHIBIT A

Schedule A to UCC

        Schedule A to UCC from Claverack Housing Ventures, LLC ("Debtor") and for the benefit of Wachovia Bank, National Association and its affiliates ("Secured Party").

Description of Collateral:

        ALL OF DEBTOR's right, title and interest in and to the following, whether now existing or hereafter acquired: (i) all fixtures, machinery, equipment and other articles of real, personal or mixed property attached to, situate or installed in or upon, or used in the operation or maintenance of, the real property (the "Land") known as The Stewardship at Millbrook Road, Claverack, New York, and more particularly described on Exhibit A, wherein the record owner is (are) Claverack Housing Ventures, LLC, or any buildings or improvements situated thereon, whether or not such real, personal or mixed property is or shall be affixed to the Land; (ii) all building materials, building machinery and building equipment delivered on site to the Land during the course of, or in connection with, any construction, repair or renovation of the buildings and improvements situated or to be situated thereon; (iii) all leases, licenses or occupancy agreements of all or any part of the Land and all extensions, renewals, and modifications thereof, and any options, rights of first refusal or guarantees relating thereto; all rents, income, revenues, security deposits, issues, profits, awards and payments of any kind payable under the leases or otherwise arising from the Land; (iv) all contract rights, accounts receivable and general intangibles relating to the Land or the use, occupancy, maintenance, construction, repair or operation thereof; all management agreements, franchise agreements, utility agreements and deposits; all maps, plans, surveys and specifications; all warranties and guaranties; all permits, licenses and approvals; and all insurance policies; and (v) all proceeds of any of the above-described property, whether cash or non-cash, and including insurance proceeds and condemnation awards; and all replacements, substitutions and accessions thereof.

EX-10

PURCHASE AND SALE AGREEMENT

        PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of January 27, 2006, between Wellsford Real Properties, Inc. (“Seller”), and Beekman Acquisition LLC, a New York limited liability company (“Buyer”).

Recitals

        A.         Seller holds a 99% membership interest in Beekman Housing Ventures, LLC (the “Company”), a Delaware limited liability company governed pursuant to a Limited Liability Company Operating Agreement, dated as of December 1, 2004 (the “Operating Agreement”).

        B.         Beekman Holdings, Inc., a New York corporation and wholly-owned subsidiary of Seller (“Holdings”) holds a 1% membership interest in the Company.

        C.         The Company is (i) the owner of the property known as Lot 3, filed map 8770, on Route 55, Beekman, New York (the “Beekman Property”), (ii) the contract vendee under a Contract of Sale dated December 22, 2004 (the “Diamond Horse Contract”) between Diamond Horse Developers, Inc. (“Diamond Horse”) and the Company with respect to property known as 2640 Route 55, Poughquag (Town of Beekman), New York (the “Diamond Horse Property,” and together with the Beekman Property, the “Properties”), and (iii) the holder of a Consolidated Fixed Rate Note dated December (undated), 2004 made by Diamond Horse to the Company in the amount of $300,000 which secures the repayment of the downpayment under the Diamond Horse Contract, if and when applicable (the “Diamond Horse Note”) and a Consolidated Mortgage dated December 22, 2004 made by Diamond Horse to the Company, securing the Diamond Horse Note and encumbering the Diamond Horse Property (the “Diamond Horse Mortgage”).

        D.         The Company’s deferred compensation plan (the “Deferred Compensation Plan”) holds assets and related account balances representing vested compensation previously earned by Messrs. Jeffrey H. Lynford and Edward Lowenthal, subject to the corresponding future obligation of the Company to pay deferred compensation to each of Messrs Lynford and Lowenthal.

        E.         In connection with the proposed plan of liquidation described in the proxy statement of Seller dated October 10, 2005 (the “Plan of Liquidation”), Seller desires to sell to Buyer and Buyer desires to purchase from Seller, (a) all of Seller’s 99% membership interest in the Company (the “Assigned Membership Interest”) and (b) all of the common stock of Holdings owned by Seller (the “Assigned Stock Interest”, and together with the Assigned Membership Interest, the “Assigned Interests”). The transfer of the Assigned Membership Interest shall be evidenced by an Assignment and Assumption Agreement, dated as of the date of the Closing (as defined in Section 3). The transfer of the Assigned Stock Interest shall be evidenced by a stock power (the “Stock Power”) in form and substance satisfactory to Buyer annexed to the stock certificate (the “Stock Certificate”) representing the Assigned Stock Interest.

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and agreed, the parties hereto hereby agree as follows:

        1.         Purchase and Sale. Subject to the terms and conditions set forth in this Agreement, Seller shall, at the Closing, sell, assign and transfer to Buyer all of Seller’s right, title and interest in and to the Assigned Interests for a purchase price (the “Purchase Price”) equal to $ 1,296,939.66. The Purchase Price will be allocated among the Assigned Interests as follows: 99% to the Assigned Membership Interest and 1% to the Assigned Stock Interest.

        2.         Representations and Warranties. (a) Seller hereby represents and warrants to Buyer that:

                (i)         Organization, Standing and Power. (A) Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland with full corporate power to own, lease and operate its property and carry on its business as currently conducted by it.

                         (B)        The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and Holdings is a corporation, duly organized validly existing and in good standing under the laws of the State of New York, with full limited liability company power and corporate power, respectively, and authority to own, lease and operate their respective properties, and carry on their respective businesses as currently conducted by them. There are no states or jurisdictions in which the character and location of any of the properties owned or leased by the Company or Holdings, or the conduct of the Company’s or Holdings’ respective businesses, makes it necessary for the Company to qualify to do business as a foreign company or Holdings to qualify as foreign corporation, except where any failure to be so qualified would not have a material adverse effect on the Company or Holdings, as the case may be. True and complete copies of the Certificate of Formation of the Company (the “Certificate of Formation”) and the Operating Agreement of the Company and the Certificate of Incorporation of Holdings (“Certificate of Incorporation”), which remain in full force and effect and have not been modified, have heretofore been furnished to Buyer. There is no action or proceeding pending or contemplated to dissolve the Company or Holdings or to terminate the Operating Agreement.

                (ii)     Assigned Membership Interest. Seller owns the Assigned Membership Interest. The Assigned Membership Interest constitutes a 99% membership interest in the Company. There are no options, warrants or other rights (including conversion or preemptive rights), agreements, arrangements or commitments of any character relating to the issued or unissued membership interests of the Company or obligating the Company to issue or sell any membership interests of or other equity interests in the Company. Except for the transactions contemplated by this Agreement, there are no outstanding contractual obligations or other commitments or arrangements of the Company to (A) repurchase, redeem or otherwise reacquire any ownership interest (or any interest therein) of the Company, (B) provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity, (C) issue or distribute to any Person (as defined below) any membership interest of the Company, or (D) issue or distribute to holders of any of the membership interests of the Company any evidences of indebtedness or assets of the Company. Other than the Operating Agreement and this Agreement, Seller is not a party or subject to any agreements or understandings of any kind, and there are no agreements or understandings of any kind between any Persons, which affect or relate to the acquisition, disposition or voting or giving of written

-2-

consents with respect to the Assigned Membership Interest. For purposes of this Agreement, “Person” shall mean any individual, sole proprietorship, joint venture, partnership, corporation, limited liability company, association, joint stock company, unincorporated organization, cooperative, trust, estate, government entity or authority (including any branch, subdivision or agency thereof), administrative or regulatory authority, or any other entity of any kind or nature whatsoever.

                (iii)         Assigned Stock Interest. Seller owns the Assigned Stock Interest. The Assigned Stock Interest constitutes all of the issued and outstanding shares of capital stock of Holdings. There are no options, warrants or other rights (including conversion or preemptive rights), agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of Holdings or obligating Holdings to issue or sell any stock of or other equity interests in Holdings. Except for the transactions contemplated by this Agreement, there are no outstanding contractual obligations or other commitments or arrangements of Holdings to (A) repurchase, redeem or otherwise reacquire any ownership interest (or any interest therein) of Holdings, (B) provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity, (C) issue or distribute to any Person any stock interest of Holdings, or (D) issue or distribute to holders of any stock of Holdings any evidences of indebtedness or assets of Holdings. Other than this Agreement, Holdings is not a party or subject to any agreements or understandings of any kind, and there are no agreements or understandings of any kind between any Persons, which affect or relate to the acquisition, disposition or voting or giving of written consents with respect to the Assigned Stock Interest.

                (iv)         Ownership of Assigned Interests. Seller owns the Assigned Interests, free and clear of any and all Liens, and at the time of the Closing will own all of the Assigned Interests, free and clear of any and all Liens. For purposes of this Agreement, “Lien” shall mean all liens, adverse claims, security interests, pledges, mortgages, charges and encumbrances of any nature whatsoever.

                (v)         Interests in Other Entities. Neither the Company nor Holdings owns or controls, directly or indirectly, any interest in any other Person.

                (vi)         Authority; Binding Agreement. The execution and delivery by Seller of this Agreement and of all of the other documents executed and delivered, or to be executed and delivered, pursuant hereto, the performance by Seller of its obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary action on the part of Seller and Seller has all necessary power and authority with respect thereto. This Agreement is, and, when executed and delivered by Seller, each of the other documents to be delivered by Seller pursuant hereto will be, the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the rights of creditors generally and subject to the rules of law governing (and all limitations on) specific performance, injunctive relief, and other equitable remedies.

                (vii)         Noncontravention. Neither the execution and delivery by Seller of this Agreement or any other documents to be executed and delivered by Seller pursuant to this

-3-

Agreement, nor, the consummation of any of the transactions contemplated hereby or thereby, nor the performance by Seller of any of its obligations hereunder or thereunder, will (nor with the giving of notice or the lapse of time or both would) (A) conflict with or result in a breach of any provision of the Certificate of Formation, the Operating Agreement or the Certificate of Incorporation, or (B) result in the creation or imposition of any Liens upon the Assigned Interests.

                (viii)         Consents. No consent, approval, order, or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of Seller, the Company or Holdings is required, and no other consents or waivers are necessary, in connection with the consummation of the transactions contemplated hereby and by the documents to be executed and delivered at the Closing, except for stockholder approval of the plan of liquidation.

                (ix)         Compliance with Law; Licenses, Permits. The Company and Holdings are in compliance in all material respects with all applicable laws, rules and regulations currently in effect. There are no certificates of occupancy, licenses, permits or approvals with respect to the Properties issued by any governmental or quasi governmental authority. The Company and Holdings have all governmental permits, licenses and authorizations necessary for the conduct of their respective businesses as presently conducted. Set forth on Exhibit A is a list of all filings made with governmental or quasi-governmental authorities with respect to the Properties.

                (x)         Financial Statements; Undisclosed Liabilities. Intentionally omitted.

                (xi)         Title to Assets. The Company and Holdings have good title to all of the assets and properties which they purport to own, free and clear of all Liens. Holdings owns no assets other than its 1% membership interest in the Company. The Properties constitute all real property which is owned, leased (whether as lessor or lessee) or subject to a contract or commitment of purchase or sale or lease (whether as lessor or lessee) by the Company or Holdings, or which is subject to a title retention or conditional sales agreement or other security device. The Company’s fee interest in the Beekman Property is subject only to those title exceptions set forth in First American Title Insurance Company of New York title policy O-1825 dated February 15, 2005. The Company’s mortgagee interest in the Diamond Horse Property is subject only to those title exceptions set forth in Fidelity National Title Insurance Company title policy 1412-809568 dated December 29, 2004.

                (xii)         Commitments. Exhibit B sets forth a list of each contract or agreement, whether written or oral (including any and all amendments thereto), to which the Company or Holdings is a party or by which the Company or Holdings is bound (collectively, the “Commitments”). Neither the Company nor Holdings is in breach of or default under any of the Commitments, nor has any event or omission occurred on the part of the Company or Holdings which through the passage of time or the giving of notice, or both, would constitute a breach of or default thereunder or cause the acceleration of or give rise to the right to accelerate the Company’s or Holdings’ obligations thereunder or result in the creation of any Lien on any of the assets owned, used or occupied by the Company or Holdings thereunder. To the

-4-

knowledge of Seller, no third party is in breach of or default under any Commitment, nor has any event or omission occurred which, through the passage of time or the giving of notice, or both, would constitute a breach of or default thereunder or give rise to an automatic termination, or the right of discretionary termination, thereof. Neither the execution, delivery and performance of this Agreement by Seller nor the consummation of the transactions contemplated by this Agreement will conflict with, or result in the breach of, termination of, give rise to any Lien or constitute a default under, or require the consent of any other party to, any Commitments. Seller has delivered or made available to Buyer true and correct copies of each of the Commitments, each as amended to date.

                (xiii)         Insurance. Exhibit C sets forth a complete and accurate list of all policies of fire, liability, product liability, workers compensation, health and other forms of insurance currently in effect with respect to the business and properties of the Company and Holdings. All such insurance is in full force and effect, and no notice of non renewal, cancellation or termination, or reduction of coverage, or intention not to renew or to cancel, terminate or reduce coverage, has been received with respect to any policy for such insurance. Except as set forth in Exhibit C, the insurance coverage provided by such policies or insurance will not terminate or lapse by reason of the transactions contemplated by this Agreement and, following the Closing, neither the Company nor Holdings will continue to be covered under such policies, excepting out those title policies referred to in subparagraph (xi) above. Except as set forth in Exhibit C, no such policy provides for or is subject to any currently enforceable retroactive rate or premium adjustment, loss sharing arrangement or other actual or contingent liability arising wholly or partially out of events arising prior to the date hereof. Seller has delivered to Buyer true and correct copies of all the insurance policies set forth in Exhibit C.

                (xiv)         Litigation. There are no suits or actions, or administrative, arbitration or other proceedings or governmental investigations, pending or, to the knowledge of Seller, threatened relating to the Company or Holdings or their officers or the Properties, nor, to the knowledge of Seller, is there any reasonable basis therefor.

                (xv)         Related Party Transactions. Neither the Company nor Holdings is presently engaged in any transaction, arrangement or other involvement with any member, manager, employee, agent consultant or affiliate of the Company, other than the transaction contemplated hereby.

                (xvi)         Employee Benefit Plans. Neither the Company nor Holdings has any employees. Except for the Company’s Deferred Compensation Plan, neither the Company nor Holdings has any Benefit Plans or Benefit Arrangements. The term “Benefit Plans” shall mean “employee benefit plans” as defined in Section 3(3) of ERISA, maintained or contributed to by the Company or Holdings or in which the Company or Holdings participates or participated and which provides benefits to employees or their spouses or covered dependents, including (A) any such plans that are “employee welfare benefit plans” as defined in Section 3(1) of ERISA and (B) any such plans that are “employee pension benefit plans” as defined in Section 3(2) of ERISA. The term “Benefit Arrangements” shall mean each and all pension, supplemental pension, basic and supplemental accidental death and dismemberment, basic and supplemental life and health insurance and benefits (including medical, dental and hospitalization), savings,

-5-

bonus, deferred compensation, incentive compensation, business travel and accident, holiday, vacation, severance pay, salary continuation, sick pay, sick leave, short and long term disability, tuition refund, service award, company car, scholarship, relocation, patent award, fringe benefit and other employee benefit arrangements, plans, contracts (other than individual employment, consulting or severance contracts), policies or practices of the Company or Holdings providing employee or executive compensation or benefits to employees.

                (xvii)         Taxes. (A) All federal, state, local and foreign income and other tax returns required to be filed with respect to the Company and Holdings have been filed in a timely manner (taking into account all extensions of due dates) and all taxes shown as due thereon have been paid, (B) there are no Liens for unpaid taxes (other than taxes not yet due and payable) upon the assets of the Company and Holdings, (C) no claims or deficiencies for income or franchise taxes have been asserted or assessed in writing against the Company or Holdings which remain unpaid, (D) no waivers of statutes of limitation are in effect in respect of any tax returns or tax obligations of the Company or Holdings, (E) the Company and Holdings have withheld and paid all taxes required to have been withheld and paid by it in connection with payments or distributions to their employees or other recipients and (F) the Company has not made any election to be taxed as a corporation or to be excluded from subchapter K of the Internal Revenue Code of 1986, as amended.

                (xviii)         Labor Matters. Neither the Company nor Holdings has experienced any work stoppage due to labor disagreements, any material labor dispute, or, to the best knowledge of Seller, any union organization attempt in connection with its business. There is no labor strike, written request for representation, slowdown or stoppage actually pending or, to the best knowledge of Seller, threatened against the Company or Holdings. There are no administrative charges or court complaints against the Company or Holdings concerning alleged employment discrimination or other employment related matters pending or, to the best knowledge of Seller, threatened before the U.S. Equal Employment Opportunity Commission or any government entity. There is not pending as of the date hereof any complaint against the Company or Holdings issued by or pending before the National Labor Relations Board or any comparable governmental body.

                (xix)         Brokerage. No investment banker, broker, finder or other intermediary was engaged by or dealt with Seller, the Company or Holdings in connection with any of the transactions contemplated by this Agreement.

        (b)           Buyer hereby represents and warrants to Seller that:

                (i)         the execution and delivery by Buyer of this Purchase and Sale Agreement, the Assignment and Assumption Agreement and the other agreements referred to herein and required to be executed by it, (A) are within Buyer’s limited liability company power and authority, (B) have been duly authorized by all requisite limited liability company or other action, (C) do not violate any provision of law, any order of any court or other agency of government, (D) do not violate Buyer’s Operating Agreement as in effect as of the date hereof, and (E) will not violate, conflict with, cause or result in a breach of or default under (with due notice or lapse of time or both) any provision of any material indenture, agreement or other instrument to which Buyer or any of its properties or assets is bound;

-6-

                (ii)         this Agreement has been duly and validly executed and delivered by Buyer and constitutes the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the rights of creditors generally and subject to the rules of law governing (and all limitations on) specific performance, injunctive relief, and other equitable remedies.

                (iii)         Brokerage. No investment banker, broker, finder or other intermediary was engaged by or dealt with Buyer in connection with any of the transactions contemplated by this Agreement.

            (c)         Buyer acknowledges and agrees that it is purchasing the Assigned Interests for investment and not with a view to any public resale or other distribution thereof and has no present intention or plan of distributing or selling such Assigned Interests or granting any participation therein. Buyer acknowledges that the Assigned Interests have not been registered under the Securities Act of 1933, as amended, or under any state securities laws, and that the Assigned Interests may not be sold, transferred or otherwise disposed of, without registration under the Act and any other applicable state securities laws, or pursuant to an exemption therefrom.

        3.         Closing.

            (a)         The closing of the transaction described herein (the “Closing”) shall be held at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, New York, New York 10104 on the date of this Agreement. The term “Closing Date” as used in this Agreement refers to the date that the Closing occurs.

            (b)         At the Closing, (i) Buyer shall pay any transfer taxes due in connection with the sale of the Assigned Interests, and (ii) there shall be no apportionment of any items of income and expense of the Beekman Property or the Company. In the event that any governmental authority hereafter asserts that any additional transfer tax is due in connection with the sale of the Assigned Interests, Buyer shall pay the same.

            (c)         The parties acknowledge that the Purchase Price includes the items of expense incurred by the Company in connection with the Properties as set forth on Exhibit D. To the extent that there are any other expenses incurred by the Company in connection with the Properties before the date hereof, Buyer shall reimburse Seller therefor upon receipt of evidence of such expenses.

        4.         Tax Matters

            (a)         Buyer shall be responsible for the preparation and timely filing of all federal, state, local and foreign income and other tax returns, reports or statements required to be filed with any taxing authority, with respect to the Company or Holdings relating to any period ending on or after the date of the Closing, and Seller agrees to promptly provide Buyer with such assistance and information, records or documents, as may reasonably be requested by Buyer, in connection with the preparation of any such tax return, report or statement. Buyer’s preparation

-7-

of a tax return, report or statement with respect to the Company or Holdings for a period which begins before the date of the Closing and ends on or after the date of the Closing shall be subject to Seller’s approval, which approval shall not be unreasonably withheld, conditioned or delayed.

            (b)         Seller shall be liable for and shall be required to promptly pay or reimburse Buyer or Holdings, for all taxes payable by or with respect to the Company or Holdings for any period which ends on or before the date of the Closing. To the extent the taxes payable are attributable to any period which includes the date of the Closing but does not begin or end on that day, the portion of taxes required to be paid or reimbursed to Buyer or Holdings shall be that portion that is attributable to that period which ends on the date of the Closing (determined on the basis of an interim closing of the books). Buyer shall be liable for and shall be required to pay all taxes payable by or with respect to the Company or Holdings for any period after the date of the Closing.

            (c)         To the extent any determination of tax liability of the Company or Holdings results in any refund of taxes, Seller shall be entitled to any such tax refund attributable to any period which ends on or before the date of the Closing. To the extent the tax refund is attributable to any period which includes the date of the Closing but does not begin or end on that day, the portion of such tax refund which shall belong to Seller shall be that portion that is attributable to that period which ends on the date of the Closing (determined on the basis of an interim closing of the books). Buyer shall promptly pay any such refund, and the interest actually received thereon, net of any taxes payable with respect to such refund, to Seller upon receipt thereof by Buyer. Buyer shall be entitled to any tax refund attributable to any period after the date of the Closing.

            (d)         Buyer shall have the sole right to represent the interests of the Company or Holdings in any tax audit or administrative or court proceeding relating to any period ending on or after the date of the Closing; provided, however, that there shall be no settlement or closing or other agreement with respect to such tax audit or proceeding relating to any period which begins before the date of the Closing and ends on or after the date of the Closing without the written consent of Seller, which shall not be unreasonably withheld, conditioned or delayed.

        5.         Covenants. The parties hereto covenant that from and after the date hereof:

            (a)         Each of the parties hereto hereby agrees to use its commercially reasonable efforts to cause all conditions precedent to its obligations (and to the obligations of the other party hereto) to consummate the transactions contemplated hereby) to be satisfied; provided, however, that nothing herein contained shall be deemed to modify any of the absolute obligations imposed upon any of the parties hereto under this Agreement or any agreement executed and delivered pursuant hereto.

            (b)         Each party hereto agrees that prior to the Closing, it will not enter into any transaction and/or take any action, and will use its commercially reasonable efforts to prevent the occurrence of any event (but excluding events which occur in the ordinary course of business and events over which such party has no control), which would result in any of its representations, warranties or covenants contained in this Agreement or in any agreement, document or instrument executed and delivered by it pursuant hereto not to be true and correct,

-8-

or not to be performed as contemplated, at and as of the time immediately after the occurrence of such transaction or event.

            (c)         Seller shall cause the Company to operate the Beekman Property in substantially the same manner it is being operated on the date hereof, and shall not allow the Company or Holdings to commit waste. Seller shall not permit the Company or Holdings to take any action with respect to the Diamond Horse Property, the Diamond Horse Contract, the Diamond Horse Note and/or the Diamond Horse Mortgage without the prior written consent of Buyer.

            (d)         The sale of the Assigned Membership Interest will cause the taxable year of the Company to close and a separate short-year federal income tax return will be filed for the period ending on the date of the Closing. Buyer and Seller agree to use their best efforts to cause the Company to make a valid and timely filed election under Section 754 of the Internal Revenue Code with such short-year return.

        6.         Buyer’s Conditions Precedent to Closing. The obligations of Buyer under this Agreement are, at Buyer’s option, subject to the satisfaction of the following conditions precedent:

            (a)         All of the representations and warranties made by Seller in this Agreement, and in other certificates, agreements or instruments which Seller has executed and delivered in connection with this Agreement, shall be true and correct in all material respects as of the date hereof and as of the Closing.

            (b)         The delivery of the executed Assignment and Assumption Agreement, dated as of the date of the Closing, evidencing the transfer of the Assigned Membership Interest by Seller to Buyer.

            (c)         The delivery of the Stock Power and Stock Certificate by Seller to Buyer.

            (d)         The delivery of a certificate of the Secretary or an Assistant Secretary, or comparable officer, of Seller dated as of the Closing, certifying that the representations and warranties of Seller remain true and correct in all material respects and certifying to: (i) corporate resolutions approving the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and (ii) the incumbency of its officers authorized to execute and deliver this Agreement and any related documents.

        7.         Seller’s Conditions Precedent to Closing. The obligations of Seller under this Agreement are, at Seller’s option, subject to the satisfaction on or before the Closing of the following conditions precedent:

            (a)         All of the representations and warranties made by Buyer in this Agreement and in other certificate, agreements or instruments which Buyer has executed and delivered in connection with this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing.

-9-

            (b)         The delivery by Buyer to Seller of the Purchase Price in immediately available funds.

            (c)         The delivery of the executed Assignment and Assumption Agreement, dated as of the date of the Closing by Buyer to Seller.

            (d)         The delivery of a certificate of the manager, or comparable officer, of Buyer, dated as of the Closing, certifying that the representations and warranties of Buyer remain true and correct in all material respects and certifying to: (i) the limited liability company resolutions approving the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and (ii) the incumbency of its managers or officers authorized to execute and deliver this Agreement and any related documents.

        8.         Closing Deliveries.

            (a)         At the Closing, Buyer shall deliver or cause to be delivered the following:

                (i)         the Purchase Price, by wire transfer of immediately available funds to such accounts as may be designated by Seller not less than two business days before the Closing;

                (ii)         Combined Real Estate Transfer Tax Return (Form TP-584), duly executed by Buyer in connection with the sale of the Assigned Membership Interest;

                (iii)         Combined Real Estate Transfer Tax Return (Form TP-584), duly executed by Buyer in connection with the sale of the Assigned Stock Interest; and

                (iv)         the Assignment and Assumption Agreement, duly executed by Buyer.

            (b)         At the Closing, Seller shall deliver or cause to be delivered the following:

                (i)         Combined Real Estate Transfer Tax Return (Form TP-584), duly executed by Seller in connection with the sale of the Assigned Membership Interest;

                (ii)         Combined Real Estate Transfer Tax Return (Form TP-584), duly executed by Seller in connection with the sale of the Assigned Stock Interest;

                (iii)         the Assignment and Assumption Agreement, duly executed by Seller;

                (iv)         evidence of the consent of Seller’s stockholders to the adoption of the plan of liquidation;

                (v)         a FIRPTA affidavit, duly executed by Seller;

-10-

                (vi)         resignations (effective as of the Closing Date) from such of the Company’s and Holdings’ members and officers, respectively, as Buyer shall have requested prior to the Closing Date;

                (vii)         the Company’s and Holdings’ minute books, certificate transfer records, seals and other materials related to the formation, operation and management of the Company and Holdings;

                (viii)         certificates of good standing dated as of within ten (10) business days from the Closing Date from the Secretary of State of the state of formation for the Company and state of incorporation for Holdings evidencing the good standing of the Company and Holdings in each jurisdictions in which said entities were formed, as well as any Certificates of Good Standing or Certificates of Authority from each jurisdiction in which the Company or Holdings is authorized to do business as a foreign corporation; and

                (ix)         such other certificates, documents and instruments as Buyer reasonably requests related to the transactions contemplated hereby.

        9.         Termination. Intentionally omitted.

        10.         Indemnification

            (a)         Seller shall indemnify and hold harmless Buyer and Buyer’s affiliates, employees, officers, directors, shareholders, members, agents and representatives (collectively, “Buyer Indemnified Persons”) for, and will pay to Buyer Indemnified Persons the amount of, any loss, liability, claim, damage or expense (including reasonable costs of investigation and defense and reasonable attorneys’ fees) whether or not involving a third-party claim (collectively, “Damages”), resulting from:

                (i)         any breach of any representation or warranty made by Seller in this Agreement;

                (ii)         any breach by Seller of any covenant or agreement of Seller in this Agreement; and

                (iii)         any and all actions, suits, proceedings, claims, demands, assessments and judgments incident to any of the foregoing.

            (b)         Buyer shall indemnify and hold harmless Seller and Seller’s affiliates, employees, officers, directors, shareholders, members, agents and representatives (collectively, “Seller Indemnified Persons”) for, and will pay to Seller Indemnified Persons the amount of, any Damages (as defined above) resulting from:

                (i)         any breach of any representation or warranty made by Buyer in this Agreement;

                (ii)         any breach by Buyer of any covenant or agreement of Buyer in this Agreement;

-11-

                (iii)         Buyer’s operation or ownership of the Company, Holdings and the Properties after the Closing; and

                (iv)         any and all actions, suits, proceedings, claims, demands, assessments and judgments incident to any of the foregoing.

            (c)

                (i)         Promptly after receipt by an indemnified party of notice of the commencement of any proceeding (a “Proceeding”) or claim against it, such indemnified party will, if a claim is to be made against an indemnifying party under paragraph (a) or (b) above, give notice to the indemnifying party of the commencement of such claim or Proceeding, but the failure to notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such claim or Proceeding is prejudiced by the indemnified party’s failure to give such notice.

                (ii)         If any Proceeding is brought against an indemnified party and it gives notice to the indemnifying party of the commencement of such Proceeding, the indemnifying party will be entitled to participate in such Proceeding and, to the extent that it wishes (unless the indemnifying party is also a party to such Proceeding and the indemnified party determines in good faith that joint representation would be inappropriate, or the indemnifying party fails to provide reasonable assurance to the indemnified party of its ability to defend such Proceeding, in which case the indemnified party may retain its own counsel and be reimbursed for its expenses incurred in connection therewith pursuant to this paragraph), to assume the defense of such Proceeding with counsel reasonably satisfactory to the indemnified party and, after notice from the indemnifying party to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will not, as long as it diligently conducts such defense, be liable to the indemnified party under this Section for any fees of other counsel or any other expenses with respect to the defense of such Proceeding, in each case subsequently incurred by the indemnified party in connection with the defense of such Proceeding, other than reasonable costs of investigation and except as provided above. If the indemnifying party assumes the defense of a Proceeding, (1) the same shall not be conclusive evidence for purposes of this Agreement that the claims made in that Proceeding are within the scope of and subject to indemnification; (2) no compromise or settlement of such claims may be effected by the indemnifying party without the indemnified party’s consent unless (A) there is no finding or admission of any violation of Legal Requirements by an indemnified person and no effect on any other claims that may be made against the indemnified party, and (B) the sole relief provided is monetary damages that are paid in full by the indemnifying party or other determination binding solely on the indemnifying party; and (3) the indemnified party will have no liability with respect to any compromise or settlement of such claims effected. If notice is given to an indemnifying party of the commencement of any Proceeding and the indemnifying party does not, within ten (10) days after the indemnified party’s notice is given, give notice to the indemnified party of its election to assume the defense of such Proceeding, the indemnifying party will be bound by any determination made in such Proceeding or any reasonable compromise or settlement effected by the indemnified party.

-12-

                (iii)          Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise or settle such Proceeding, but the indemnifying party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld).

            (d)         A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the party from whom indemnification is sought, provided such notice is given prior to the first anniversary of the Closing Date.

        11.         Miscellaneous.

            (a)         This Agreement together with the other agreements referred to herein to be executed by the parties hereto constitute the sole understanding of the parties hereto with respect to the subject matter hereof.

            (b)         The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties hereto.

            (c)         No amendment or modification of this Agreement shall be binding unless the same shall be in writing and duly executed by the parties hereto, except that any of the terms and provisions of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof.

            (d)         Any notices or other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon receipt if delivery is in person or by overnight courier, (ii) one day after transmission if delivery is by facsimile and (iii) three business days after mailing if delivery is by certified mail, return receipt requested, postage prepaid, in each case addressed to the applicable party as set forth in the signature page, or at such other address for a party as shall be specified by like notice.

If to Seller: Wellsford Real Properties, Inc.
535 Madison Avenue
New York, New York 10022
Attention: James Burns, Chief Financial Officer

with a copy to:

Bryan Cave LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Alan S. Pearce, Esq.

-13-

If to Buyer: Beekman Acquisition LLC
c/o Mr. Jeffrey H. Lynford
535 Madison Avenue
New York, New York 10022

with a copy to:

Keane & Beane, P.C.
445 Hamilton Avenue
White Plains, New York 10601
Attention: Patrick J. O'Sullivan, Esq.

            (e)         This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

            (f)         This Agreement may be executed in counterparts, each of which shall be deemed an original and together which shall constitute one and the same instrument.

            (g)         The representations and warranties of each party hereunder shall survive the Closing for a period of one year from the Closing Date.

            (h)         Except as otherwise provided in this Agreement, each of the parties hereto shall bear its own expenses in connection with the transactions contemplated hereby.

            (i)         This Agreement shall not be assignable by any of the parties hereto, except that Buyer shall have the right to assign Buyer’s interest in this Agreement to any Person(s) in which the principals of Buyer have an interest provided that such assignment does not violate the Plan of Liquidation.

            (j)         If any provision or portion thereof of this Agreement is held to be illegal, invalid or unenforceable under any present or future law in any jurisdiction, (i) such provision or portion thereof will be fully severable in such jurisdiction, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision or portion thereof had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or portion thereof or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision or portion thereof, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible to the maximum extent allowable by law.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

-14-

SELLER Wellsford Real Properties, Inc.
By:	/s/ James J. Burns
	Name:     James Burns Title:      Chief Financial Officer
BUYER Beekman Acquisition LLC
By:	/s/ Edward Lowenthal
	Name:     Edward Lowenthal Title:     Manager

-15-

EXHIBITS

A.        Schedule of Governmental Filings

B.        Schedule of Commitments

C.        Schedule of Insurance

D.        Schedule of Expenses Included in the Purchase Price

-16-

EXHIBIT A

SCHEDULE OF GOVERNMENTAL FILINGS

1.        Site Plan/Special Permit submitted to the Beekman Town Planning Board in November, 2005.

-17-

EXHIBIT B

SCHEDULE OF COMMITMENTS

1.        Diamond Horse Contract

-18-

EXHIBIT C

SCHEDULE OF INSURANCE

-19-

EXHIBIT D

SCHEDULE OF EXPENSES INCLUDED IN THE PURCHASE PRICE

-20-