Variable Interest Entities

6 Months Ended

Jun. 30, 2011

Variable Interest Entities [Abstract]

15.

Variable Interest Entities

Consolidated Variable Interest Entities

Andover Operating Property — The lease agreement executed in January 2010 on the Andover, Massachusetts property gives the tenant an option to purchase the building for a fixed price of $10,500,000. The option is exercisable at the tenant’s discretion at any point during the lease term prior to January 2013. As a result of the fixed price purchase option contained in this lease agreement, the Trust has determined that its Andover, Massachusetts property is a VIE for which the Trust is the primary beneficiary since it has the power to direct activities that most significantly impact the economics of the property.

The carrying amounts of the Trust’s Andover property include land of $1,200,000, building of $6,114,000 and lease intangibles of $1,456,000. Prior to the execution of the lease agreement, the Andover property was not considered a VIE but it has been consolidated since its acquisition. There is no mortgage debt associated with this property.

Deer Valley Medical Center Operating Property — The Trust has concluded that its venture, WRT-DV LLC (“WRT-DV”), the entity that owns the property, is a VIE. This assessment is primarily based on the fact that the equity investment at risk is not sufficient to finance its activities without additional subordinated financial support.

Pursuant to the terms of WRT-DV’s operating agreement, the Trust receives a priority return on $7,900,000 of its invested capital, with the balance of the capital being allocated 96.5% to the Trust and 3.5% to its joint venture partner, Fenway. The Trust has effectively all control rights with respect to WRT-DV. Therefore the Trust has determined it is the primary beneficiary and consolidates the venture which owns the operating property.

The carrying amounts of the Deer Valley property include land and building of $9,900,000 and lease intangibles of $2,363,000. There is no mortgage debt associated with this property.

Variable Interest Entities Not Consolidated

Equity Method Investments

Marc Realty Equity Investments and Preferred Equity Investment — The Trust has concluded that the nine Marc Realty equity investments and the one preferred equity investment are variable interests in VIEs. This assessment is primarily based on the fact that the underlying entities do not have sufficient equity at risk to permit them to finance their activities without additional subordinated financial support.

While the Trust maintains certain protective rights under the terms of the agreements governing the Marc Realty investments, the power to direct the activities that most significantly impact the economics of the Marc Realty investments is vested in Marc Realty as the managing member. As such, management has concluded that the Trust is not the primary beneficiary of these Marc Realty investments. At June 30, 2011, the Trust’s investment in the Marc Realty equity investments was $43,735,000 and its investment in the preferred equity investment was $4,118,000.

Sealy Northwest Atlanta LP and Sealy Newmarket LP — The Trust has concluded that the Sealy Northwest and Sealy Newmarket equity investments are variable interests in VIEs. This assessment is primarily based on the fact that the underlying investment entities do not have sufficient equity at risk to permit them to finance their activities without additional subordinated financial support. While the Trust maintains certain protective rights under the terms of the agreements governing these investments, the power to direct the activities that most significantly impact the economics is vested in Sealy, the managing member of the joint ventures. As such, management has concluded that the Trust is not the primary beneficiary of the Sealy Northwest or Sealy Newmarket investments.

LW Sofi LLC — The Trust has concluded that the LW Sofi equity investment is a variable interest in a VIE. This assessment is primarily based on the fact that the underlying investment entity does not have sufficient equity at risk to permit them to finance their activities without additional subordinated financial support. The Trust has determined that it is not the primary beneficiary of LW Sofi as it shares equally in the power to make decisions that most effect the economics of the entity.

446 High Line LLC — The Trust has concluded that the High Line equity investment is a variable interest in a VIE. This assessment is primarily based on the fact that the underlying investment entity does not have sufficient equity at risk to permit them to finance their activities without additional subordinated financial support. While the Trust maintains certain protective rights under the terms of the agreements governing the High Line investment, at present the power to direct the activities that most significantly impact the economics of is vested in the managing member of the joint venture. As such, management has concluded that the Trust is not the primary beneficiary of the High Line investment.

Vintage Housing Holdings LLC — The Trust has concluded that the Vintage equity investment is a variable interest in a VIE. This assessment is primarily based on the fact that the voting rights of the general partner and managing member entities are not proportional to their obligations to absorb expected losses and rights to receive residual returns of the legal entities. While the Trust maintains certain protective rights under the terms of the agreements governing the Vintage investment, the power to direct the activities that most significantly impact the economics of is vested in the managing member of the joint venture. As such, management has concluded that the Trust is not the primary beneficiary of the Vintage investment.

Loans Receivable and Loan Securities — The Trust has reviewed its loans receivable and loan securities and certain of these assets have been identified as variable interests in a VIE because the equity investment at risk at the borrowing entity level is not considered sufficient for the entity to finance its activities without additional subordinated financial support.

Certain loans receivable and loan securities which have been determined to be VIEs are performing assets, meeting their debt service requirements, and the borrowers hold title to the collateral. In these cases the borrower has the power to direct the activities that most significantly impact the economic performance of the VIE, including management and leasing activities. In the event of default under these loans the Trust only has protective rights and has the risk to absorb losses only to the extent of its loan investment. The borrower has been determined to be the primary beneficiary for these performing assets.

The Trust has determined that it does not currently have the power to direct the activities of the ventures collateralizing any of its loans receivable and loan securities. For this reason, management believes that it does not control, nor is it the primary beneficiary of these ventures. Accordingly, the Trust accounts for these investments under the guidance for loans receivable and real estate debt investments.