Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "intends," "plans," "would," "may" or similar expressions in this quarterly report on Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Many of the factors that will determine these items are beyond our ability to control or predict. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, those set forth in our Annual Report on Form 10-K/A Amendment No. 1 for the year ended December 31, 2007 under "Forward Looking Statements" and "Item 1A. Risk Factors," as well as our other filings with the SEC. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, investors should use caution in relying on forward-looking statements, which are based on information, judgments and estimates at the time they are made, to anticipate future results or trends.

Management's Discussion and Analysis of Financial Condition and Results of Operations includes a discussion of our consolidated financial statements for the three and nine months ended September 30, 2008 as compared to the three and nine months ended September 30, 2007. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

This item should be read in conjunction with the financial statements, footnotes thereto and other items contained elsewhere in this report.

Overview

Winthrop Realty Trust, which together with its subsidiaries we refer to as the Trust, we, us, and Company, is a real estate investment trust, which we refer to as a REIT, engaged in the business of owning real property and real estate related assets. With certain self-imposed limitations, we seek opportunities to invest in or acquire most types of real estate assets or securities. We operate in three strategic business segments: (i) Operating Properties; (ii) Loan Assets and Loan Securities; and (iii) REIT Equity Interests. We acquire assets through direct ownership as well as through entering into specific strategic alliances and ventures. In particular, we have entered into two significant venture arrangements. Our venture with Marc Realty LLC, which we refer to as Marc Realty, a Chicago area real estate company, is our primary vehicle for investments in the Chicago metropolitan area. In addition, since its formation in March 2006, we have acquired substantially all of our loan assets and loan securities through Lex-Win Concord, LLC (f/k/a Concord Debt Holdings LLC), which we refer to as Lex-Win Concord or Concord, a venture with Lexington Realty Trust, which we refer to as Lexington, and, effective August 2, 2008, a subsidiary of Inland American Real Estate Inc., which we refer to as Inland.

Our business objective is to maximize long-term shareholder value through a total return value approach to real estate investing. We seek to achieve this objective by identifying and investing in discrete real estate investments as well as entering into ventures including arrangements with regional or specialized real estate professionals with extensive experience in a particular market. In addition, we seek to enter into strategic co-investment ventures managed by us with institutional and high net worth investors to enhance our total return through acquisition, asset management and other fees, and a promoted economic interest. As opportunities present themselves and as market conditions dictate, we will focus our investment activity in one or more of our business segments and aggressively pursue such opportunities. Pursuant to the terms of our agreement with Lexington, we will not make any future direct investments in net lease or single-tenant properties through December 31, 2008.

In light of the change in the economic environment that has taken place since the third quarter of 2007 and the subsequent disruption of the capital and credit market which have limited the availability of financing and the ability to raise capital through equity issuances, during the first nine months of 2008 we continued to focus our attention primarily on protecting against and preparing for the rigors and opportunities of this changed environment. In particular, we have sought to maximize our liquidity and reduce our exposure to short-term debt. In this regard, at September 30, 2008 we had $179,774,000 of unrestricted cash and cash equivalents.

With respect to our debt exposure, each of our investment platforms and investments is essentially a stand alone business such that any potential problems or liabilities which might occur are limited to that specific platform or investment. Consequently, our exposure is in each case limited to our equity in that particular investment and not to us as a whole. Inclusive of extension rights, the secured debt of our wholly owned assets has no debt maturing in 2008, approximately $9,500,000 or 4% of the total outstanding debt maturing in 2009, and the balance of approximately $224,208,000 or 96% of our total debt maturing in 2011 or later. In July 2008 we drew down the entire $70,000,000 available under our credit facility and on October 22, 2008, we repaid approximately $33,700,000 of this borrowing. This credit facility has a maturity of December 16, 2008 and an option to extend for one year subject to certain conditions. On October 10, 2008, we notified KeyBank that we were electing to extend the term of the credit facility. One of the conditions to our extension is an absence of a general material adverse change in the credit markets condition which may be waived by KeyBank. Accordingly, given the current economic climate, there can be no assurance that KeyBank will honor our extension request.

In addition to maximizing our cash and limiting our exposure to short term debt, with the significant decline in the stock prices in general and REIT shares in particular, we assessed whether acquiring our own shares was a prudent use of our cash. In this regard, on September 25, 2008 we announced that our Board had approved a stock repurchase plan pursuant to which we can acquire up to 5,000,000 of our Common Shares. As of November 3, 2008 we had acquired a total of 350,000 Common Shares pursuant to the repurchase plan. Further, on October 29, 2008, we acquired 944,000 of our Series B-1 Preferred Shares at a discount of 27% from their liquidation value.

The disruption in the capital and credit markets has had a more immediate impact on Concord as margin calls have increased on loan securities in general and the ability to issue collateral debt obligations and the availability of new financing has effectively been eliminated. In light of the limited financing alternatives, Concord continued its efforts to reduce its exposure to maturing debt. In this regard, in January 2008 Concord obtained a $100,000,000 credit facility from KeyBank. Further, in August 2008 Inland was admitted as a member in Concord and agreed to contribute, subject to certain conditions, up to $100,000,000 to Concord, which contributions are to be used primarily for new acquisitions and, if Inland, agrees, satisfaction of margin calls and repayments on credit facilities. In October 2008, Concord obtained $43,500,000 from Inland and reduced the outstanding balance on one of its repurchase agreements by $42,600,000 and extended the maturity date on the line from March 30, 2009 to March 30, 2011.

During the first nine months of 2008, Concord acquired loan securities issued by its Concord Real Estate CDO 2006-1, which we refer to as CDO-1, with a face value of approximately $25,100,000 for a total purchase price of approximately $12,100,000. After giving effect to the acquisition of the CDO-1 loan securities, the total obligations remaining to third parties by CDO-1 were $351,525,000, which obligations mature in December 2016. See "Concord Debt Holdings" below for additional information relating to Concord. After giving effect to the extensions, with respect to Concord's debt obligations exclusive of its obligations under CDO-1, Concord currently has $38,874,000 of debt maturing in the next 12 months, and $98,516,000 maturing in the following 12 months with the remaining balances maturing thereafter.

We intend to fund our future investments through one or more of the following:
cash, borrowings under our credit facility, property loans, issuance of debt and equity, and ventures with third parties. As investments mature in value to the point where we are unlikely to achieve better than a market return on their then enhanced value, it is likely we will exit the investment and seek to redeploy the capital to higher yielding opportunities. Therefore, the sale of these investments is an important part of our overall earnings and may result in uneven earnings that may vary greatly from quarter to quarter.

Capital and Credit Market Deterioration

As the capital and credit market deterioration has worsened, we have performed additional assessments to determine our exposure to bankruptcies, limited availability of financing and equity offerings, decline in stock prices in general and REITs in particular and declining values for our Loan Assets and Loan Securities. We have further reviewed our risk associated with counterparties to our hedging instruments and credit facilities. Although we have described in more detail throughout this Item 2 where we believe our greatest risk to operating results and liquidity is today, the recent unprecedented volatility in capital and credit markets may create additional risks in the upcoming months and possibly years.

In particular, the significant decline in stock prices in general, and REITs in particular, could impair our ability to raise capital through equity and debt offerings thereby requiring us to obtain additional capital through other means. Further, the declining availability of financing has had, and will likely continue to have, an impact on our ability to finance additional acquisitions and ultimately, the value of real estate generally. If financing continues to be limited and rates rise, the value of real estate will likely fall thereby creating potential additional opportunities. The inability of our and Concord's borrowers to obtain replacement financing could lead to more loan defaults and/or negotiated extensions to existing loans beyond their current expirations. In addition, tenant defaults at the properties underlying the Concord portfolio could negatively impact our Loan Asset and Loan Security business segment. We note further that the current capital and credit market deterioration has caused Loan Assets and Loan Securities to trade at substantial discounts.

We utilize interest rate swaps both directly and indirectly through our investment in Concord. At September 30, 2008, we had $26,000,000 of notional amounts and Concord had $203,262,000 of notional amounts of hedges.

The three counterparties of these arrangements are major financial institutions (Credit Suisse International, KeyBank National Association and Bear Stearns Capital Management) with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties.

We measure our success in meeting this objective by a number of factors, including increases in diluted per share net income, cash returns generated by our investments, cash flow from operating activities, shareholder equity and total return to our shareholders. As described in more detail under results of operations below, our net income and earnings per share have been significantly negatively impacted by Concord's recognition of other-than-temporary impairments and loan loss reserves which aggregated $7,205,000 and $65,221,000 for the three and nine months ended September 30, 2008, respectively. We are a 50% common equity owner of Concord through our investment in Lex-Win Concord.

                             WINTHROP REALTY TRUST
                          FORM 10-Q SEPTEMBER 30, 2008

During the three and nine months ended September 30, 2008 and 2007 our operating
results were as follows:

                                 For the Three Months Ended       For the Nine Months Ended
                                       September 30,                    September 30,
                                    2008             2007            2008            2007

Net income (loss)              $     2,229,000    $ 5,370,000   $  (15,516,000 ) $ 26,847,000

Net income (loss) per Common
Share, basic                   $          0.03    $      0.08   $        (0.21 ) $       0.36

Net income (loss) per Common
Share, diluted                 $          0.03    $      0.08   $        (0.21 ) $       0.36

Net cash flow provided by
operating activities                                            $   24,858,000   $ 23,777,000

At September 30, 2008 and December 31, 2007, total assets and total shareholders' equity were as follows:

                              September 30, 2008     December 31, 2007

Total assets                 $        736,141,000   $       745,447,000

Total shareholders' equity   $        316,836,000   $       291,794,000

Our activities are administered by FUR Advisors LLC, which we refer to as our advisor, an entity controlled by and partially owned by our executive officers. Pursuant to the terms of an advisory agreement, our advisor is entitled to receive a base management fee and an incentive fee. In addition, our advisor or its affiliate is also entitled to receive property and construction management fees at commercially reasonable rates as determined by our independent Trustees. The incentive fee is only payable at such time, if at all, when holders of our Common Shares receive aggregate distributions above a threshold amount as defined. At September 30, 2008, the threshold amount was $378,275,000 which was equivalent to $3.87 per Common Share-diluted. Accordingly, if the Trust had been liquidated at September 30, 2008, our advisor would have been entitled to receive 20% of any amounts available for distribution, if any, in excess of such threshold amount. At such time as shareholders' equity exceeds the threshold amount, we will record a liability, in accordance with GAAP, equal to approximately 20% of the difference between shareholders' equity and the threshold amount.

Since July 1, 2008, we have entered into the following transactions:

· On July 7, 2008, we made a $1,050,000 mezzanine loan on a newly acquired property in the Marc Realty portfolio. The property is located at 180 North Wacker, Chicago, Illinois. The loan bears interest at 8.5%, requires monthly payments of interest only and matures on April 18, 2012. In connection with the loan, we acquired an equity interest in the borrower which entitles us to share in operating cash flow and capital proceeds.

· On July 28, 2008, we received a distribution of $10,000,000 from our equity investment in Concord.

· On August 2, 2008, we, together with Lexington, restructured Concord and admitted Inland as a member in Concord with a redeemable 10% preferred membership interest. In connection with this transaction, we formed with Lexington a new entity known as Lex-Win Concord LLC ("Lex-Win Concord"). Both we and Lexington contributed all of their interests in Concord and WRP Management, LLC, the entity that provides collateral management services to Concord Real Estate CDO 2006-1, Ltd. ("CDO-1"), to Lex-Win Concord. As a result, each of us and Lexington holds a 50% ownership interest in Lex-Win Concord. Immediately following such contribution, Inland contributed $20,000,000 to Concord and was admitted as a member of Concord. Inland further agreed to contribute up to an additional $80,000,000 to Concord. Inland's contributions are to be used primarily for additional investments by Concord, and if Inland agrees, to satisfy any future margin calls or prepayments on Concord's credit facilities. In connection with its investment in Concord, Inland is entitled to receive a priority return of 10% on its contributed and unreturned capital.

· On August 6, 2008, Lex-Win Acquisition sold all of its shares of Piedmont Office Realty Trust for an aggregate price of $32,289,000. We received a distribution of our pro-rata share of $9,041,000 in connection with this sale.

· On August 20, 2008, we acquired through a venture with Sealy & Company Inc., which we refer to as Sealy, a six building office-flex campus containing approximately 470,000 square feet in Northwest Atlanta, Georgia. The campus is both similar to and adjacent with the twelve building office-flex campus containing approximately 472,000 square feet previously acquired in a venture with Sealy in Northwest Atlanta, Georgia. The purchase price for the property was $47,000,000, inclusive of assumed debt. The venture assumed an existing $37,000,000, 6.12% first mortgage loan encumbering the property which matures in November 2016. Our initial percentage ownership in the new venture is 68%.

· During October 2008, we acquired through several share repurchases 350,000 of our Common Shares at an average price of approximately $2.66 per Common Share aggregating $930,000.

· On October 28 and November 3, 2008, we acquired a total of 1,024,000 of our Series B-1 Preferred Shares for a gross price of approximately $18,583,000, which represents an approximately 27.4% discount from their liquidation value.

· On October 28, 2008, we acquired in a privately negotiated transaction 3,500,000 shares of common stock in Lexington at a purchase price of $5.60 per share and obtained seller non-recourse financing equal to 50% of the purchase price, which financing has a term of three years, bears interest at a rate of 3-month LIBOR plus 250 basis points and requires margin calls only at such time as the loan amount equals or exceeds 60% of the value of the shares.

· On October 31, 2008, Concord reduced the balance on its repurchase line with Column Financial by $42,600,000 and extended the maturity of the line through March 2011.

· On October 10, 2008, Concord extended the maturity date on a repurchase agreement with Greenwich Capital Financial which was scheduled to expire December 15, 2008 for a period of one year.

Critical Accounting Policies and Estimates

A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended December 31, 2007. Other than the partial adoption of SFAS No. 157 (see "Item 1. Financial Statements - Note 3"), there have been no significant changes to those policies during 2008.

Recently Issued Accounting Standards

See "Item 1. Financial Statements - Note 2."

Results of Operations

As discussed earlier, one of the factors used to measure management's performance is net operating income. We report our operations by each of our three strategic business segments to provide a measure of our performance in these segments. We define net operating income for each segment as that segment's revenue and other income less operating expenses. In addition to our three business segments, we include interest on cash reserves, general and administrative expenses and other non-segment specific income and expense items in Corporate Activities. (See "Item 1. Financial Statements - Note 12.")

Results of Operations - Nine Months Ended September 30, 2008 Versus September 30, 2007

Net Earnings (loss)

Net loss was $15,516,000 for the nine months ended September 30, 2008, a decrease in earnings of $42,363,000 from net income of $26,847,000 for the nine months ended September 30, 2007. As described in greater detail below, the decrease was due primarily to decreases in net income from our Loan Assets and Loan Securities business segment as well as our REIT Equity Interests business segment.

Operating Properties

Net operating income from our operating properties was $23,469,000 for the nine months ended September 30, 2008 as compared to $23,843,000 for the nine months ended September 30, 2007. This decrease in net operating income of $374,000 from our Operating Properties was the result of the following:

Rental Income - Overall, rental income increased by $1,817,000 to $32,533,000. With respect to properties owned during both nine month periods, rental income decreased by $1,162,000 due primarily to a $1,123,000 tenant lease buyout in June 2007 at our Chicago, Illinois (Ontario) property. This decrease was more than offset by increased rental income of $2,979,000 from properties acquired during and after the nine months ended September 30, 2007 due to income of $2,808,000 from our River City property which we acquired in foreclosure on October 2, 2007 and an increase of $171,000 at Creekwood Apartments, which was acquired on March 29, 2007. Average occupancy at our operating properties (other than Creekwood Apartments) was 96.3% for the nine months ended September 30, 2008 compared to 97.0% for the nine months ended September 30, 2007.

Operating Expenses - Overall, operating expenses increased by $1,622,000 to $5,517,000. With respect to properties owned during both nine month periods, operating expenses increased by $279,000 (approximately 8%) primarily due to increases in general maintenance costs at several properties. The remaining increase in operating expenses is due to an increase in operating expenses of $1,343,000 incurred at properties acquired during and after the nine months ended September 30, 2007.

Real Estate Tax Expense - The increase in real estate tax expense of $814,000 is due to an increase of $698,000 from operating properties acquired during and after the nine months ended September 30, 2007 and an increase of $116,000 (approximately 9%) from operating properties held for both periods. The primary changes in real estate tax expense at our properties held for both periods resulted from increased assessments at our Chicago, Illinois (Ontario) property and our Circle Tower property which were partially offset by a lower assessment at our Lisle, Illinois properties.

Sealy Ventures -Our investments in Sealy Northwest Atlanta, L.P., made in December 2006, and Sealy Airpark Nashville, made in April 2007, continue to generate positive cash flow. However, we recognized an equity loss of $1,277,000 for the nine months ended September 30, 2008 as compared to $1,292,000 for the nine months ended September 30, 2007. In addition, we recognized an equity loss of $90,000 on our investment in Sealy Newmarket GP, made in August 2008. The losses are a result of charges for depreciation and amortization exceeding net operating income for these properties for both periods. Average occupancy at the Sealy Northwest Atlanta, L.P. property was 91.5% for the nine months ended September 30, 2008 compared to 91% for the nine months ended September 30, 2007. Average occupancy at the Sealy Nashville property was 89.1% for the nine months ended September 30, 2008 compared to 85.4% for the period April 2007 (acquisition) to September 30, 2007.

Interest Expense - Interest expense related to our operating properties increased by $313,000 to $11,117,000 for the nine months ended September 30, 2008 compared to $10,804,000 for the nine months ended September 30, 2007. The increase is due to an increase in interest expense of $568,000 related to operating properties acquired during and after the nine months ended September 30, 2007 which more than offset a decrease of $255,000 in interest expense related to properties held for both periods.

Depreciation and Amortization Expense - Depreciation and amortization expense relating to our operating properties increased by $252,000 to $9,065,000 for the nine months ended September 30, 2008 compared to $8,813,000 for the nine months ended September 30, 2007. Depreciation and amortization expense related to operating properties acquired during and after the nine months ended September 30, 2007 increased by $288,000 offset by depreciation and amortization expense related to operating properties held for both periods which decreased by $36,000.

Loan Assets and Loan Securities

Net operating loss from our loan assets and loan securities was $9,786,000 for the nine months ended September 30, 2008 as compared to net operating income of $23,421,000 for the nine months ended September 30, 2007. The changes were the result of the following:

Concord - Earnings from equity investment in Concord decreased by $21,487,000 to a loss of $13,953,000 for the nine months ended September 30, 2008 as compared to earnings of $7,534,000 for the nine months ended September 30, 2007. As described above, it was determined that an other-than-temporary impairment of $57,021,000 be taken with respect to Concord's bond portfolio and an $8,200,000 loan loss provision be taken with respect to Concord's loan portfolio. These impairments were partially offset by net interest earnings of $28,303,000 for the nine months ended September 30, 2008 compared to $18,631,000 for the nine-month period ended September 30, 2007 as a result of the significant investments during the first nine months of 2007. Additionally, during the nine months ended September 30, 2008, Concord recognized a gain, net of deferred costs, on extinguishment of debt of $12,699,000 relating to the acquisition for $12,070,000 of debt issued by its CDO-1 with a face value of $25,125,000. For information relating to Concord's assets and operating results see "Item 1. Note 6" and "Off Balance Sheet Investments-Concord Debt Holdings" below.

Marc Realty - We recognized equity in earnings from our Marc Realty portfolio of $2,518,000 for the nine months ended September 30, 2008 as compared to $10,441,000 for the nine months ended September 30, 2007. The decrease in earnings was primarily the result of earnings on our participating equity interests of $915,000 recognized during the nine months ended September 30, . . .