37008--3/17/2008--Winthrop_Realty

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{investment, property, distribution}

{loan, real, estate}

{debt, indebtedness, cash}

{acquisition, growth, future}

{loss, insurance, financial}

{stock, price, share}

{competitive, industry, competition}

{condition, economic, financial}

{tax, income, asset}

{personnel, key, retain}

{regulation, change, law}

{provision, law, control}

{cost, regulation, environmental}

General Risks Relating to Us and Our Business 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. We are subject to significant competition and we may not compete successfully. Investing through ventures presents additional risks. Investing in private companies involves specific risks. 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. Many of our investments are illiquid, and we may not be able to adjust our portfolio in response to changes in economic and other conditions, which may result in losses to us. We leverage our portfolio, which may adversely affect our return on our investments and may reduce cash available for distribution. We may change our investment and operational policies. Interest rate fluctuations may reduce the spread we earn on our interest-earning investments and may reduce our investment return. We and Concord engage in hedging transactions that may limit gains or result in losses. 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. We may not be able to obtain capital to make investments. We have significant distribution obligations to holders of our Series B-1 preferred shares. Our ratio of total debt to total entity value may increase. Covenants in our debt instruments could adversely affect our financial condition and our ability to make future investments. Future issuances and sales of equity or debt interests pursuant to an outstanding registration statement may affect the market price of our common shares. If we issue preferred equity or debt we may be exposed to additional restrictive covenants and limitations on our operating flexibility, which could adversely affect our ability to pay dividends. Our due diligence may not reveal all of the liabilities associated with a proposed investment and may not reveal other weaknesses. We may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates. 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. We may be adversely affected by unfavorable economic changes. Risks Relating to our Operating Properties 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. We may be unable to refinance our existing debt or obtain favorable refinancing terms. Some of our potential losses may not be covered by insurance. Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unanticipated expenditures that adversely affect our ability to pay dividends. We may incur costs to comply with environmental laws. Risks Relating to our Loan Assets and Loan Securities The mortgage loans we invest in are subject to delinquency, foreclosure and loss. The subordinate loan assets we invest in may be subject to risks relating to the structure and terms of the transactions, 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. If credit spreads widen, the value of Concord s assets may suffer. Prepayments can increase, adversely affecting yields on our investments. Concord may not be able to issue CDO securities, which may require Concord to seek more costly financing for its real estate loan assets or to liquidate assets. Concord s repurchase 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, if any, will be collateralized with loan assets and loan securities that are similar to those collateralizing its existing investment grade CDO, and any adverse market trends are likely to adversely affect Concord s CDO and the issuance of future CDOs. The recent capital market crisis has made financings through CDOs difficult. Concord may not be able to access financing sources on favorable terms, or at all, which could adversely affect its ability to execute its business plan and its ability to make distributions. Credit ratings assigned to Concord s investments are subject to ongoing evaluations and we cannot be sure that the ratings currently assigned to Concord s 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 operating results and cash flows. Risks Relating to our REIT Equity Interests Our investments in REIT equity interests are subject to specific risks relating to the particular REIT issuer of the securities and to the general risks of investing in equity interests of REITs. Risks Relating to Our Management Ability of our advisor to operate properties directly affects our financial condition. We are dependent on our advisor and the loss of our advisor s key personnel could harm our operations and adversely affect the value of our shares. There are conflicts of interest in our relationship with The incentive fee payable to our advisor may be substantial. Termination of the Advisory Agreement may be costly.

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37008--3/17/2008--Winthrop_Realty_Trust