37008--3/16/2007--Winthrop_Realty

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{investment, property, distribution}

{loan, real, estate}

{debt, indebtedness, cash}

{stock, price, share}

{acquisition, growth, future}

{capital, credit, financial}

{provision, law, control}

{loss, insurance, financial}

{regulation, change, law}

{control, financial, internal}

{competitive, industry, competition}

Risks Relating to our Business Risks incidental to the ownership and operation of real estate assets. We face a number of significant issues with respect to the properties we own which may adversely affect our financial performance. Many of our investments are illiquid, and we may not be able to vary our portfolio in response to changes in economic and other conditions, which may result in losses to us. The mortgage loans we invest in are subject to delinquency, foreclosure and loss. The subordinate mortgage notes, mezzanine loans and participation interests in mortgage and mezzanine loans we invest in may be subject to risks relating to the structure and terms of the transactions, as well as subordination in bankruptcy, and there may not be sufficient funds or assets remaining to satisfy our subordinate notes, which may result in losses to us. We invest in subordinate mortgage-backed securities which are subject to a greater risk of loss than senior securities. We may hold the most junior class of mortgage-backed securities which are subject to the first risk of loss if any losses are realized on the underlying mortgage loans. Our investments in REIT securities are subject to specific risks relating to the particular REIT issuer of the securities and to the general risks of investing in equity real estate securities. We have grown rapidly since January 1, 2004. We may not be able to maintain this rapid growth and our failure to do so could adversely affect our stock price. We may not be able to invest our cash reserves in suitable investments. A significant portion of our investments are in the Chicago metropolitan area and are affected by the economic cycles and risks inherent to that region. Investing through joint ventures presents additional risks. Investing in private companies involves a high degree of risk. We may acquire or sell additional assets or properties. Our failure or inability to consummate these transactions or manage the results of these transactions could adversely affect our operations and financial results. We leverage our portfolio, which may adversely affect our return on our investments and may reduce cash available for distribution. Our rights to the collateral underlying securities in which we invest may be unenforceable. Interest rate fluctuations may reduce the spread we earn on our interest-earning investments and may reduce our investment return. Our investments in real estate securities, mortgage notes, mezzanine loans and participation interests in mortgage and mezzanine loans are subject to changes in credit spreads and if spreads widen, the value of our loan and securities portfolios would decline. Prepayment rates can increase, adversely affecting yields on our investments. We may engage in hedging transactions that may limit our gains or result in losses. Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unanticipated expenditures that adversely impact our ability to pay dividends. We must manage our investments in a manner that allows us to rely on an exemption from registration under The Investment Company Act in order to avoid the consequences of regulation under that Act. Risks Specific to Our Investment in Concord Concord may not be able to acquire eligible securities for a CDO issuance, or may not be able to issue CDO securities on attractive terms, which may require Concord to seek more costly financing for its real estate loan assets or to liquidate assets. Concord s warehouse facilities and its CDO financing agreements may limit its ability to make investments. The repurchase agreements that Concord uses to finance its investments may require it to provide additional collateral. Concord s future investment grade CDOs will be collateralized with real estate securities that are similar to those collateralizing its existing investment grade CDO issuance, and any adverse market trends that affect these types of real estate securities are likely to adversely affect Concord s CDOs in general. Credit ratings assigned to our investments are subject to ongoing evaluations and we cannot be sure that the ratings currently assigned to our investments will not be downgraded. Concord may make investments in assets with lower credit quality, which will increase our risk of losses. The use of CDO financings with coverage tests may have a negative impact on Concord s, and accordingly our operating results and cash flows. Risks Related to Our Company We may not be able to obtain capital to make investments. We have significant distribution obligations to holders of our preferred shares. We have indebtedness and this indebtedness, and its cost, may increase. Covenants in our debt instruments could adversely affect our financial condition and our acquisitions and development activities. Future issuances and sales of our Common Shares pursuant to an outstanding registration statement may affect the market price of our Common Shares. We may change our investment strategy without shareholder consent and make riskier investments. Our due diligence may not reveal all of the liabilities associated with the asset and may not reveal other weaknesses. Dependence on qualification as a REIT; tax and other consequences if REIT qualification is lost. In order to maintain our status as a REIT, we may be forced to borrow funds during unfavorable market conditions. Factors that may cause us to lose our New York Stock Exchange listing. Ownership limitations in our Bylaws may adversely affect the market price of our Common Shares. Failure to maintain effective internal controls could have a material adverse affect on our business, operating results and share price. Risks Relating to Our Management Ability of FUR Advisors to operate properties directly affects our financial condition. We are dependent on FUR Advisors and the loss of FUR Advisors key personnel could harm our operations and adversely affect the value of our beneficial interests. There are conflicts of interest in our relationship with FUR Advisors. The incentive fee payable to FUR Advisors may be substantial. Termination of the Advisory Agreement may be costly.

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37008--3/16/2007--Winthrop_Realty_Trust