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Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
ASC 820 defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities as well as certain U.S. Treasury securities that are highly liquid and are actively traded in secondary markets; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.
14.    Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheets), (ii) loans receivable (for which we have elected the fair value option under ASC Subtopic 825-10, Financial Instruments ("ASC 825-10")), (iii) interest rate swaps and caps and (iv) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy.
(Amounts in thousands)As of June 30, 2024
TotalLevel 1Level 2Level 3
Deferred compensation plan assets ($4,840 included in restricted cash and $103,713 in other assets)
$108,553 $60,595 $— $47,958 
Loans receivable (included in investments in partially owned entities)32,984 — — 32,984 
Interest rate swaps and caps designated as a hedge (included in other assets)158,305 — 158,305 — 
Interest rate caps not designated as a hedge (included in other assets)6,860 — 6,860 — 
Total assets$306,702 $60,595 $165,165 $80,942 
Mandatorily redeemable instruments (included in other liabilities)$49,383 $49,383 $— $— 
Sold interest rate caps not designated as a hedge (included in other liabilities)6,842 — 6,842 — 
Interest rate swaps designated as a hedge (included in other liabilities)369 — 369 — 
Total liabilities$56,594 $49,383 $7,211 $— 
(Amounts in thousands)As of December 31, 2023
TotalLevel 1Level 2Level 3
Deferred compensation plan assets ($26,363 included in restricted cash and $78,883 in other assets)
$105,246 $58,956 $— $46,290 
Loans receivable (included in investments in partially owned entities)32,984 — — 32,984 
Interest rate swaps and caps designated as a hedge (included in other assets)138,772 — 138,772 — 
Interest rate caps not designated as a hedge (included in other assets)4,154 — 4,154 — 
Total assets$281,156 $58,956 $142,926 $79,274 
Mandatorily redeemable instruments (included in other liabilities)$49,386 $49,386 $— $— 
Interest rate swaps designated as a hedge (included in other liabilities)7,239 — 7,239 — 
Sold interest rate caps not designated as a hedge (included in other liabilities)4,092 — 4,092 — 
Total liabilities$60,717 $49,386 $11,331 $— 

Deferred Compensation Plan Assets
Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties. We receive quarterly financial reports that provide net asset values on a fair value basis from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund. The period of time over which these underlying assets are expected to be liquidated is unknown. The third-party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.
The table below summarizes the changes in the fair value of deferred compensation plan assets that are classified as Level 3.
(Amounts in thousands)For the Three Months Ended June 30, 2024For the Six Months Ended June 30, 2024
Beginning balance$48,544 $46,290 
Purchases424 1,542 
Sales(1,387)(3,263)
Realized and unrealized (losses) gains(1,010)1,262 
Other, net1,387 2,127 
Ending balance$47,958 $47,958 
14.    Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Derivatives and Hedging
We use derivative instruments principally to reduce our exposure to interest rate increases. We do not enter into or hold derivative instruments for speculative trading purposes. We recognize the fair values of all derivatives in "other assets" or "other liabilities" on our consolidated balance sheets. Changes in the fair value of our cash flow hedges are recognized in other comprehensive income until the hedged item is recognized in earnings. Reported net income and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of hedging instruments and hedged items, but will have no effect on cash flows. Cash payments and receipts related to our interest rate hedges are classified as operating activities and included within our disclosure of cash paid for interest on our consolidated statements of cash flows, consistent with the classification of the hedged interest payments.
The following table summarizes our consolidated hedging instruments, all of which hedge variable rate debt, as of June 30, 2024 and December 31, 2023.
(Amounts in thousands)As of June 30, 2024As of December 31, 2023
Notional AmountAll-In Swapped RateSwap/Cap Expiration DateFair Value AssetFair Value LiabilityFair Value AssetFair Value Liability
Interest rate swaps:
555 California Street mortgage loan$840,000 
(1)
6.03%05/26$8,331 $— $15,494 
(2)
$6,091 
770 Broadway mortgage loan700,000 4.98%07/2729,934 — 20,306 — 
PENN 11 mortgage loan500,000 
(3)
6.28%10/253,485 — 4,702 1,148 
Unsecured revolving credit facility575,000 3.88%08/2725,373 — 17,064 — 
Unsecured term loan700,000 4.53%(4)18,349 — 11,089 — 
100 West 33rd Street mortgage loan480,000 5.26%06/2711,498 — 3,550 — 
888 Seventh Avenue mortgage loan200,000 
(5)
4.76%09/277,431 — 4,340 — 
4 Union Square South mortgage loan97,300 
(6)
3.74%01/251,440 — 2,327 — 
435 Seventh Avenue mortgage loan(7)
75,000 6.96%04/26— 369 — — 
Interest rate caps:
1290 Avenue of the Americas mortgage loan950,000 (8)11/2547,621 — 53,784 — 
One Park Avenue mortgage loan525,000 (9)03/254,422 — 5,297 — 
Various mortgage loans421 — 819 — 
$158,305 $369 $138,772 $7,239 
____________________
(1)Represents our 70.0% share of the $1.2 billion mortgage loan.
(2)Represents the fair value of the interest rate swap arrangement that expired in May 2024.
(3)In January 2024, we entered into an interest rate swap arrangement for $250,000 of the $500,000 PENN 11 mortgage loan. Together with the existing swap arrangement the loan will bear interest at an all-in swapped rate of 6.28% through October 2025.
(4)Represents the aggregate fair value of various interest rate swap arrangements to hedge interest payments on our unsecured term loan, which matures in December 2027. The impact of these interest rate swap arrangements is detailed below:
Swapped BalanceAll-In Swapped Rate
Unswapped Balance
(bears interest at S+130)
10/23 through 07/25700,000 4.53%100,000 
07/25 through 10/26550,000 4.36%250,000 
10/26 through 08/2750,000 4.04%750,000 

(5)The remaining $59,800 mortgage loan balance bears interest at a floating rate of SOFR plus 1.80% (7.13% as of June 30, 2024).
(6)The remaining $22,700 mortgage loan balance bears interest at a floating rate of SOFR plus 1.50% (6.83% as of June 30, 2024).
(7)Entered into in May 2024.
(8)SOFR cap strike rate of 1.00%. In connection with the arrangement, we made a $63,100 up-front payment in November 2023, of which $18,930 was attributable to noncontrolling interests.
(9)SOFR cap strike rate of 3.89%.
14.    Fair Value Measurements - continued
Fair Value Measurements on a Nonrecurring Basis
There were no assets measured at fair value on a nonrecurring basis on our consolidated balance sheets as of June 30, 2024.
As of December 31, 2023, we had $76,570,000 of assets measured at fair value on a nonrecurring basis, comprised of $55,097,000 of consolidated real estate assets and $21,473,000 of investments in partially owned entities. These assets were written down to estimated fair value for impairment purposes and were classified as Level 3 investments. The fair values of these assets were measured using discounted cash flow analyses and the significant unobservable quantitative inputs in the table below.
As of December 31, 2023
Unobservable Quantitative InputRangeWeighted Average
(based on fair value of investments)
Discount rates
7.50% - 8.00%
7.99%
Terminal capitalization rates
5.50%
5.50%
Financial Assets and Liabilities not Measured at Fair Value
Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily money market funds, which invest in obligations of the United States government) and our secured and unsecured debt. The fair values of these instruments are estimated using discounted cash flow analyses provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. The fair value of cash equivalents and borrowings under our unsecured revolving credit facilities and unsecured term loan are classified as Level 1. The fair value of our secured debt and unsecured debt are classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments.
(Amounts in thousands)As of June 30, 2024As of December 31, 2023
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Cash equivalents$720,167 $720,000 $825,720 $826,000 
Debt:
Mortgages payable$5,708,919 $5,532,000 $5,729,615 $5,569,000 
Senior unsecured notes1,200,000 1,090,000 1,200,000 1,069,000 
Unsecured term loan800,000 800,000 800,000 800,000 
Unsecured revolving credit facilities575,000 575,000 575,000 575,000 
Total$8,283,919 
(1)
$7,997,000 $8,304,615 
(1)
$8,013,000 
____________________
(1)Excludes $46,685 and $53,163 of deferred financing costs, net and other as of June 30, 2024 and December 31, 2023, respectively.