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 and six months ended June 30, 2018 and 2017 is set forth in Note 22 - Segment Information.



(Amounts in thousands)	For the Three Months Ended June 30, 2018							For the Three Months Ended June 30, 2017
	Total		New York		Other			Total		New York		Other
Base rent	$	405,927	$	343,084	$	62,843		$	393,116	$	334,476	$	58,640
Hotel Pennsylvania	27,082		27,082		—			24,986		24,986		—
Trade shows	11,586		—		11,586			10,541		—		10,541
Property rentals	444,595		370,166		74,429			428,643		359,462		69,181
Operating expense reimbursements	44,784		40,356		4,428			39,014		35,510		3,504
Tenant services	13,528		10,394		3,134			12,643		10,031		2,612
Tenant expense reimbursements	58,312		50,750		7,562			51,657		45,541		6,116
BMS cleaning fees	30,867		33,407		(2,540		)	24,425		26,617		(2,192		)
Management and leasing fees	2,707		2,464		243			2,777		2,465		312
Lease termination fees	804		400		404			1,106		1,062		44
Other income	4,533		1,365		3,168			2,479		1,715		764
Fee and other income	38,911		37,636		1,275			30,787		31,859		(1,072		)
Total consolidated revenues	$	541,818	$	458,552	$	83,266		$	511,087	$	436,862	$	74,225



(Amounts in thousands)	For the Six Months Ended June 30, 2018							For the Six Months Ended June 30, 2017
	Total		New York		Other			Total		New York		Other
Base rent	$	812,490	$	687,758	$	124,732		$	776,956	$	660,157	$	116,799
Hotel Pennsylvania	41,754		41,754		—			37,627		37,627		—
Trade shows	30,461		—		30,461			28,952		—		28,952
Property rentals	884,705		729,512		155,193			843,535		697,784		145,751
Operating expense reimbursements	92,652		85,082		7,570			85,389		78,466		6,923
Tenant services	25,970		20,158		5,812			25,301		20,614		4,687
Tenant expense reimbursements	118,622		105,240		13,382			110,690		99,080		11,610
BMS cleaning fees	59,222		63,560		(4,338		)	49,496		52,740		(3,244		)
Management and leasing fees	5,471		4,945		526			5,052		4,492		560
Lease termination fees	1,149		708		441			4,956		4,789		167
Other income	9,086		3,071		6,015			5,416		4,216		1,200
Fee and other income	74,928		72,284		2,644			64,920		66,237		(1,317		)
Total consolidated revenues	$	1,078,255	$	907,036	$	171,219		$	1,019,145	$	863,101	$	156,044