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Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2011
Summary of Significant Accounting Policies [Abstract] 
Summary of Significant Accounting Policies
2.  
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, although management believes that the disclosures presented herein are adequate to make the accompanying unaudited consolidated interim financial statements not misleading. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated annual financial statements and the notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC. In the opinion of management, all adjustments considered necessary for fair statements have been included, and all such adjustments are of a normal recurring nature. The results of operations for the nine months ended September 30, 2011 are not necessarily indicative of the operating results for the full year.
The accompanying unaudited consolidated financial statements represent the consolidated results of Winthrop, its wholly-owned taxable REIT subsidiary, WRT TRS Management Corp., and the Operating Partnership. All majority-owned subsidiaries and affiliates over which the Trust has financial and operating control and variable interest entities (“VIE’s”) in which the Trust has determined it is the primary beneficiary are included in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation. The Trust accounts for all other unconsolidated joint ventures using the equity method of accounting. Accordingly, the Trust’s share of the earnings of these joint ventures and companies is included in consolidated net income.
Reclassifications
Certain prior year balances have been reclassified in order to conform to the current year presentation. Discontinued operations for the three and nine month periods ended September 30, 2011 include the Trust’s properties in Lafayette, Louisiana; Knoxville, Tennessee; and St. Louis, Missouri. Discontinued operations for the three and nine month periods ended September 30, 2010 also include the Trust’s properties in Athens, Georgia and Sherman, Texas which were disposed of in 2010.
Investments in Real Estate
Real estate assets are stated at historical cost. Expenditures for repairs and maintenance are expensed as incurred. Significant renovations that extend the useful life of the properties are capitalized. Depreciation for financial reporting purposes is computed using the straight-line method.
Upon the acquisition of real estate, the Trust assesses the fair value of acquired assets (including land, buildings and improvements, and identified intangibles) and acquired liabilities. The Trust allocates purchase price based on these assessments.
Real estate investments and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When evaluating the carrying amount, the Trust considers the future undiscounted cash flows expected to result from the use and the eventual disposition of the property. Undiscounted cash flows are used to assess recoverability and when warranted, discounted cash flows are used to assess fair value. Cash flow assumptions include market rental rates, lease terms, lease up costs and operating expenses during the hold period as well as proceeds expected to result from the disposition of the property.
Earnings Per Share
The Trust determines basic earnings per share on the weighted average number of Common Shares of Beneficial Interest (“Common Shares”) outstanding during the period and reflects the impact of participating securities. The holders of the Trust’s Series B-1 Cumulative Convertible Redeemable Preferred Shares (“Series B-1 Preferred Shares”) and the Series C Cumulative Convertible Redeemable Preferred Shares (“Series C Preferred Shares”) are entitled to receive cumulative preferential dividends on a quarterly basis equal to the greater of (i) $0.40625 per share quarterly (6.5% of the liquidation preference on an annualized basis) or (ii) cash dividends payable on the number of Common Shares into which the Series B-1 Preferred Shares and Series C Preferred Shares (assuming for this purpose that the conversion price of the Series C Preferred Shares equals the conversion price of the Series B-1 Preferred Shares) are convertible. The Trust computes diluted earnings per share based on the weighted average number of Common Shares outstanding combined with the incremental weighted average effect from all outstanding potentially dilutive instruments.
The Trust has calculated earnings per share in accordance with relevant accounting guidance for participating securities and the two class method. The reconciliation of earnings attributable to Common Shares outstanding for the basic and diluted earnings per share calculation is as follows (in thousands, except per share data):
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2011     2010     2011     2010  
Basic
                               
Income from continuing operations
  $ 10,298     $ 5,512     $ 21,621     $ 15,229  
Income attributable to non-controlling interest
    (318 )     (175 )     (851 )     (595 )
Preferred dividend of Series C Preferred Shares
    (59 )     (59 )     (176 )     (230 )
Allocations of income to Series C Preferred Shares
    (18 )     —       —       —  
 
                       
Income from continuing operations applicable to Common Shares
    9,903       5,278       20,594       14,404  
Income (loss) from discontinued operations
    (134 )     (1,529 )     2       (2,045 )
 
                       
Net income applicable to Common Shares for earnings per share purposes
  $ 9,769     $ 3,749     $ 20,596     $ 12,359  
 
                       
 
                               
Basic weighted-average Common Shares
    32,949       21,412       30,889       21,064  
 
                       
 
                               
Income from continuing operations
  $ 0.30     $ 0.25     $ 0.67     $ 0.68  
Income (loss) from discontinued operations
    —       (0.07 )     —       (0.09 )
 
                       
Net income per Common Share
  $ 0.30     $ 0.18     $ 0.67     $ 0.59  
 
                       
 
                               
Diluted
                               
Income from continuing operations
  $ 10,298     $ 5,512     $ 21,621     $ 15,229  
Income attributable to non-controlling interest
    (318 )     (175 )     (851 )     (595 )
Preferred dividend of Series C Preferred Shares
    (59 )     (59 )     (176 )     —  
Allocation of income to Series C Preferred Shares
    (18 )     —       —       —  
 
                       
Income from continuing operations applicable to Common Shares
    9,903       5,278       20,594       14,634  
Income (loss) from discontinued operations
    (134 )     (1,529 )     2       (2,045 )
 
                       
Net income applicable to Common Shares for earnings per share purposes
  $ 9,769     $ 3,749     $ 20,596     $ 12,589  
 
                       
 
                               
Basic weighted-average Common Shares
    32,949       21,412       30,889       21,064  
Series B-1 Preferred Shares (1)
    —       —       —       —  
Series C Preferred Shares (2)
    —       —       —       433  
Stock options (3)
    —       2       —       2  
 
                       
Diluted weighted-average Common Shares
    32,949       21,414       30,889       21,499  
 
                       
 
                               
Income from continuing operations
  $ 0.30     $ 0.25     $ 0.67     $ 0.68  
Income (loss) from discontinued operations
    —       (0.07 )     —       (0.09 )
 
                       
Net income per Common Share
  $ 0.30     $ 0.18     $ 0.67     $ 0.59  
 
                       
     
(1)  
The Series B-1 Preferred Shares were anti-dilutive for the three and nine months ended September 30, 2011 and 2010 and are not included in the weighted-average shares outstanding for the calculation of diluted earnings per Common Share.
 
(2)  
The Series C Preferred Shares were anti-dilutive for the three and nine months ended September 30, 2011 and the three months ended September 30, 2010 and are not included in the weighted-average shares outstanding for the calculation of diluted earnings per Common Share. The Series C Preferred Shares were dilutive for the nine months ended September 30, 2010.
 
(3)  
The Trust’s outstanding stock options were anti-dilutive for the three and nine months ended September 30, 2011 and are not included in the weighted average shares outstanding for the calculation of diluted earnings per Common Share. The stock options were dilutive for the three and nine months ended September 30, 2010.