Revenue Recognition

On January 1, 2018, we adopted ASC 606 which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. This standard requires us to recognize for certain of our revenue sources the transfer of promised goods or services to customers in an amount that reflects the consideration we are entitled to in exchange for those goods or services. We adopted this standard effective January 1, 2018 using the modified retrospective method applied to all existing contracts not yet completed as of January 1, 2018 and recorded a $14,519,000 cumulative-effect adjustment to beginning accumulated deficit. The adoption of ASC 606 did not have a material impact on our consolidated financial statements.

Our revenues primarily consist of property rentals, tenant expense reimbursements, and fee and other income. We operate in two reportable segments: New York and Other, with a significant portion of our revenues included in the "New York" segment. We have the following revenue sources and revenue recognition policies:

•

Base rent is revenue arising from tenant leases. These rents are recognized over the non-cancelable term of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements. We commence rental revenue recognition when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a tenant improvement allowance for improvements that are owned by the tenant, we recognize the allowance as a reduction of rental revenue on a straight-line basis over the term of the lease.


•	Hotel revenue arising from the operation of Hotel Pennsylvania consists of rooms revenue, food and beverage revenue, and banquet revenue. Room revenue is recognized when rooms are occupied. Food and beverage and banquet revenue are recognized when the services have been transferred.


•	Trade shows revenue arising from the operation of trade shows is primarily booth rentals. This revenue is recognized upon the occurrence of the trade shows.


•	Operating expense reimbursements is revenue arising from tenant leases which provide for the recovery of all or a portion of the operating expenses and real estate taxes of the common areas of our properties. Revenue is recognized in the same period as the related expenses are incurred.


•	Tenant services is revenue arising from sub-metered electric, elevator, trash removal and other services provided to tenants at their request. This revenue is recognized as the services are transferred.

•

Fee and other income includes management, leasing, and other revenue arising from contractual agreements with third parties or with partially owned entities, and includes Building Maintenance Service ("BMS") cleaning, engineering and security services. This revenue is recognized as the services are transferred. Fee and other income also includes lease termination fee income which is recognized immediately if a tenant vacates or is recognized on a straight-line basis over the shortened remaining lease term.


4.	Revenue Recognition - continued

Below is a summary of our revenues by segment. Base rent, operating expense reimbursements and lease terminations represent revenues from leases and are recognized in accordance with ASC Topic 840, Leases. Revenues from Hotel Pennsylvania, trade shows, tenant services, BMS cleaning fees, management and leasing fees and other income represent revenues recognized in accordance with ASC 606. Additional financial information related to these reportable segments for the three months ended March 31, 2018 and 2017 is set forth in Note 22 - Segment Information.



(Amounts in thousands)	For the Three Months Ended March 31, 2018
	Total		New York		Other
Base rent	$	406,565	$	344,674	$	61,891
Trade shows	18,873		—		18,873
Hotel Pennsylvania	14,672		14,672		—
Property rentals	440,110		359,346		80,764
Operating expense reimbursements	47,846		44,719		3,127
Tenant services	12,464		9,771		2,693
Tenant expense reimbursements	60,310		54,490		5,820
BMS cleaning fees	28,355		30,153		(1,798		)
Management and leasing fees	2,764		2,481		283
Lease termination fees	345		308		37
Other income	4,553		1,706		2,847
Fee and other income	36,017		34,648		1,369
Total consolidated revenues	$	536,437	$	448,484	$	87,953



(Amounts in thousands)	For the Three Months Ended March 31, 2017
	Total		New York		Other
Base rent	$	383,843	$	325,681	$	58,162
Trade shows	18,408		—		18,408
Hotel Pennsylvania	12,641		12,641		—
Property rentals	414,892		338,322		76,570
Operating expense reimbursements	46,401		43,005		3,396
Tenant services	12,632		10,534		2,098
Tenant expense reimbursements	59,033		53,539		5,494
BMS cleaning fees	25,071		26,123		(1,052		)
Management and leasing fees	2,275		2,027		248
Lease termination fees	3,850		3,727		123
Other income	2,937		2,501		436
Fee and other income	34,133		34,378		(245		)
Total consolidated revenues	$	508,058	$	426,239	$	81,819