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Investments in Unconsolidated Joint Ventures (Tables)
6 Months Ended
Jun. 30, 2015
Equity Method Investments and Joint Ventures [Abstract]  
Schedule of general information on joint ventures
As of June 30, 2015 and December 31, 2014, the carrying value for acquisition, development and construction arrangements were as follows (in thousands):
Loan Type
 
June 30, 2015
 
December 31, 2014
 
Initial Maturity Date
Mezzanine loan and preferred equity
 
$
99,777

 
$
99,629

 
March 2016
Mezzanine loan(1)
 
45,913

 
46,246

 
February 2022
 
 
$
145,690

 
$
145,875

 
 
____________________________________________________________________
(1)
We have an option to convert our loan to equity interest subject to certain conditions. In addition, we have determined that our option to convert the loan to equity is not a derivative financial instrument pursuant to Generally Accepted Accounting Principles, or GAAP. As such, the embedded feature is not required to be bifurcated and the fair value accounting for the embedded feature at each reporting date is not applicable.
The table below provides general information on each of our joint ventures as of June 30, 2015:
Property
Partner
Ownership
Interest
Economic
Interest
Approximate Square Feet
Acquisition Date
Acquisition
Price(1)
(in thousands)
100 Park Avenue
Prudential Real Estate Investors
49.90%
49.90%
834,000

January 2000
$
95,800

717 Fifth Avenue
Jeff Sutton/Private Investor
10.92%
10.92%
119,500

September 2006
251,900

800 Third Avenue(2)
Private Investors
60.52%
60.52%
526,000

December 2006
285,000

1745 Broadway
Ivanhoe Cambridge, Inc.
56.88%
56.88%
674,000

April 2007
520,000

Jericho Plaza
Onyx Equities/Credit Suisse
20.26%
20.26%
640,000

April 2007
210,000

The Meadows(3)
Onyx Equities
50.00%
50.00%
582,100

September 2007
111,500

600 Lexington Avenue
Canadian Pension Plan Investment Board
55.00%
55.00%
303,515

May 2010
193,000

Property
Partner
Ownership
Interest
Economic
Interest
Approximate Square Feet
Acquisition Date
Acquisition
Price(1)
(in thousands)
11 West 34th Street
Private Investor/
Jeff Sutton
30.00%
30.00%
17,150

December 2010
10,800

7 Renaissance
Louis Cappelli
50.00%
50.00%
65,641

December 2010
4,000

3 Columbus Circle(4)
The Moinian Group
48.90%
48.90%
741,500

January 2011
500,000

280 Park Avenue
Vornado Realty Trust
50.00%
50.00%
1,219,158

March 2011
400,000

1552-1560 Broadway(5)
Jeff Sutton
50.00%
50.00%
35,897

August 2011
136,550

724 Fifth Avenue
Jeff Sutton
50.00%
50.00%
65,040

January 2012
223,000

10 East 53rd Street
Canadian Pension Plan Investment Board
55.00%
55.00%
354,300

February 2012
252,500

33 Beekman(6)
Harel Insurance and Finance/TNG 33 LLC
45.90%
45.90%

August 2012
31,000

521 Fifth Avenue
Plaza Global
Real Estate Partners LP
50.50%
50.50%
460,000

November 2012
315,000

21 East 66th Street(7)
Private Investors
32.28%
32.28%
16,736

December 2012
75,000

315 West 36th Street
Private Investors
35.50%
35.50%
147,619

December 2012
45,000

650 Fifth Avenue(8)
Jeff Sutton
50.00%
50.00%
32,324

November 2013

121 Greene Street
Jeff Sutton
50.00%
50.00%
7,131

September 2014
27,400

175-225 Third Street
KCLW 3rd Street LLC/LIVWRK LLC
95.00%
95.00%

October 2014
74,600

55 West 46th Street
Prudential Real Estate Investors
25.00%
25.00%
347,000

November 2014
295,000

Stonehenge Portfolio(9)
Various
Various
Various
2,046,733

February 2015
36,668

____________________________________________________________________
(1)
Acquisition price represents the actual or implied gross purchase price for the joint venture, which is not adjusted for subsequent acquisitions of additional interest.
(2)
In March 2015, we acquired an additional 17.56% interest in this joint venture for $67.5 million.
(3)
In June 2015, we entered into an agreement to sell the property for $121.1 million. This transaction is expected to close during the third quarter of 2015, subject to customary closing conditions.
(4)
As a result of the sale of a condominium interest in September 2012, Young & Rubicam, Inc., or Y&R, owns floors three through eight at the property. Because the joint venture has an option to repurchase these floors, the gain associated with this sale was deferred.
(5)
The purchase price represents only the purchase of the 1552 Broadway interest which comprised approximately 13,045 square feet. The joint venture also owns a long-term leasehold interest in the retail space and certain other spaces at 1560 Broadway, which is adjacent to 1552 Broadway.
(6)
As of June 30, 2015, the redevelopment project was substantially complete and will be conveyed to Pace University during the third quarter of 2015.
(7)
We hold a 32.28% interest in three retail and two residential units at the property and a 16.14% interest in three residential units at the property.
(8)
The joint venture owns a long-term leasehold interest in the retail space at 650 Fifth Avenue. In connection with the ground lease obligation, SLG provided a performance guaranty and our joint venture partner executed a contribution agreement to reflect its pro rata obligation. In the event the property is converted into a condominium unit and the landlord elects the purchase option, the joint venture shall be obligated to acquire the unit at the then fair value.
(9)
In February 2015, we acquired an interest in a portfolio of Manhattan residential and retail properties for $40.2 million, of which $3.5 million represented an increase in ownership interest in six of our existing consolidated joint venture properties.  The $40.2 million of consideration included the issuance of $40.0 million aggregate liquidation preference of 3.75% Series M Preferred Units of limited partnership interest of the Operating Partnership.
Schedule of first mortgage notes payable collateralized by the respective joint venture properties and assignment of leases
The first mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at June 30, 2015 and December 31, 2014, respectively, are as follows (amounts in thousands):
Property
 
Maturity Date
 
Interest
Rate(1)
 
June 30, 2015
 
December 31, 2014
Fixed Rate Debt:
 
 
 
 
 
 
 
 
7 Renaissance
 
December 2015
 
10.00
%
 
$
2,600

 
$
2,147

11 West 34th Street
 
January 2016
 
4.82
%
 
16,749

 
16,905

280 Park Avenue
 
June 2016
 
6.57
%
 
696,563

 
700,171

1745 Broadway
 
January 2017
 
5.68
%
 
340,000

 
340,000

Jericho Plaza(2)
 
May 2017
 
5.65
%
 
163,750

 
163,750

800 Third Avenue
 
August 2017
 
6.00
%
 
20,910

 
20,910

315 West 36th Street(3)
 
December 2017
 
3.16
%
 
25,000

 
25,000

521 Fifth Avenue
 
November 2019
 
3.73
%
 
170,000

 
170,000

717 Fifth Avenue(4)
 
July 2022
 
4.45
%
 
300,000

 
300,000

21 East 66th Street
 
April 2023
 
3.60
%
 
12,000

 
12,000

717 Fifth Avenue(4)
 
July 2024
 
9.00
%
 
319,900

 
314,381

3 Columbus Circle(5)
 
March 2025
 
3.61
%
 
350,000

 

Stonehenge Portfolio(6)
 
Various
 
4.18
%
 
434,492

 

Total fixed rate debt
 
 
 
 
 
$
2,851,964

 
$
2,065,264

Floating Rate Debt:
 
 
 
 
 
 
 
 
The Meadows
 
September 2015
 
7.75
%
 
67,350

 
67,350

1552 Broadway(7)
 
April 2016
 
4.26
%
 
188,410

 
184,210

Other loan payable
 
June 2016
 
1.08
%
 
30,000

 
30,000

650 Fifth Avenue(8)
 
October 2016
 
3.69
%
 
65,000

 
65,000

175-225 Third Street
 
December 2016
 
4.25
%
 
40,000

 
40,000

10 East 53rd Street
 
February 2017
 
2.69
%
 
125,000

 
125,000

724 Fifth Avenue
 
April 2017
 
2.60
%
 
275,000

 
275,000

33 Beekman(9)
 
August 2017
 
2.93
%
 
65,506

 
52,283

600 Lexington Avenue
 
October 2017
 
2.28
%
 
114,774

 
116,740

55 West 46th Street(10)
 
October 2017
 
2.49
%
 
150,000

 
150,000

Stonehenge Portfolio
 
December 2017
 
3.25
%
 
10,500

 

121 Greene Street
 
November 2019
 
1.69
%
 
15,000

 
15,000

100 Park Avenue
 
February 2021
 
1.94
%
 
360,000

 
360,000

21 East 66th Street
 
June 2033
 
2.88
%
 
1,844

 
1,883

3 Columbus Circle(5)
 
 
 
 
 

 
230,974

Total floating rate debt
 
 
 
 
 
$
1,508,384

 
$
1,713,440

Total joint venture mortgages and other loans payable
 
 
 
$
4,360,348

 
$
3,778,704

____________________________________________________________________
(1)
Effective weighted average interest rate for the three months ended June 30, 2015, taking into account interest rate hedges in effect during the period.
(2)
This loan is in default as of June 30, 2015 due to the non-payment of debt service. The joint venture is in discussions with the special servicer on account of the loan.
(3)
In July 2015, the joint venture refinanced the previous mortgage.
(4)
These loans are comprised of a $300.0 million fixed rate mortgage loan and $290.0 million mezzanine loan. The mezzanine loan is subject to accretion based on the difference between contractual interest rate and contractual pay rate.
(5)
In March 2015, the joint venture refinanced the previous mortgage and incurred a net loss on early extinguishment of debt of $0.8 million.
(6)
Amount is comprised of $13.5 million, $56.0 million, $35.0 million, $7.4 million, $142.7 million, and $179.9 million in fixed-rate mortgages that mature in July 2016, June 2017, November 2017, February 2018, August 2019, and June 2024, respectively.
(7)
These loans are comprised of a $150.0 million mortgage loan and a $41.5 million mezzanine loan. As of June 30, 2015, $1.7 million of the mortgage loan and $1.4 million of the mezzanine loan was unfunded.
(8)
This loan has a committed amount of $97.0 million, of which $32.0 million was unfunded as of June 30, 2015.
(9)
This loan has a committed amount of $75.0 million, of which $18.4 million is recourse to us. Our partner has indemnified us for its pro rata share of the recourse guarantee. A portion of the guarantee terminates upon the joint venture reaching certain milestones. We believe it is unlikely that we will be required to perform under this guarantee.
(10)
This loan has a committed amount of $190.0 million, of which $40.0 million was unfunded as of June 30, 2015.
Schedule of combined balance sheets for the unconsolidated joint ventures
The combined balance sheets for the unconsolidated joint ventures, at June 30, 2015 and December 31, 2014, are as follows (in thousands):
 
June 30, 2015
 
December 31, 2014
Assets
 
 
 
Commercial real estate property, net
$
6,124,617

 
$
5,275,632

Other assets
924,855

 
810,567

Total assets
$
7,049,472

 
$
6,086,199

Liabilities and members' equity
 
 
 
Mortgages and other loans payable
$
4,360,348

 
$
3,778,704

Other liabilities
495,523

 
485,572

Members' equity
2,193,601

 
1,821,923

Total liabilities and members' equity
$
7,049,472

 
$
6,086,199

Company's investments in unconsolidated joint ventures
$
1,262,723

 
$
1,172,020

Schedule of combined statements of income for the unconsolidated joint ventures
The combined statements of income for the unconsolidated joint ventures, from acquisition date through the three and six months ended June 30, 2015 and 2014 are as follows (in thousands):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Total revenues
$
143,535

 
$
130,495

 
$
272,451

 
$
291,633

Operating expenses
26,345

 
18,362

 
51,831

 
45,045

Ground rent
2,572

 
2,632

 
5,164

 
4,657

Real estate taxes
22,335

 
15,406

 
41,711

 
32,342

Interest expense, net of interest income
51,715

 
44,728

 
95,722

 
97,064

Amortization of deferred financing costs
3,145

 
2,026

 
6,155

 
6,659

Transaction related costs, net of recoveries
3

 
(207
)
 
11

 
64

Depreciation and amortization
37,894

 
33,858

 
70,878

 
79,462

Total expenses
144,009

 
116,805

 
271,472

 
265,293

Loss on early extinguishment of debt

 
(3,546
)
 
(833
)
 
(6,743
)
Net income (loss) before gain on sale
$
(474
)
 
$
10,144

 
$
146

 
$
19,597

Company's equity in net income from unconsolidated joint ventures
$
2,994

 
$
8,619

 
$
7,024

 
$
14,748