Subsequent Events

12 Months Ended

Dec. 31, 2011

Subsequent Events [Abstract]

Subsequent Events

22. Subsequent Events

All relevant events or transactions that occurred after the balance sheet date not otherwise disclosed and incorporated in the Notes to the Consolidated Financial Statements are described below.

Southern California Office Portfolio Note—On January 6, 2012, Socal Loan obtained a $40,000,000 repurchase facility. All of the net proceeds from the repurchase facility were distributed entirely to the Trust in partial redemption of the Trust’s interest in the Socal Loan resulting in a decrease in the Trust’s ownership interest in the Socal Loan to approximately 56%. Pursuant to the repurchase facility: (i) monthly payments on the funds advanced at a rate of LIBOR (with a 1% LIBOR floor) plus 9% are required to be made by the joint venture; (ii) interest at the rate of 2% is added to the repurchase price; (iii) the Socal Loan is required to repurchase the C-Note on January 6, 2014, however the Socal Loan has the right, subject to certain conditions including the payment of a 0.5% extension fee, to extend the repurchase date for two six-month extensions; (iv) the Socal Loan is permitted to voluntarily repurchase the C-Note at any time, provided, however, if such repurchase is made prior to April 30, 2013, the Socal Loan is required to pay a make-whole amount equal to the interest payable on the amount advanced through April 30, 2013 less any interest previously paid; and (v) upon repurchase, the Socal Loan is required to pay an exit fee of 1.5% if such repurchase is during the initial term or 1.0% if during an extended term. The repurchase date is subject to acceleration in the event of customary payment and covenant defaults by the Socal Loan but not a default on the C-Note so long as the Socal Loan continues to make the required payments under the repurchase facility.

The obligations under the repurchase facility are fully recourse to the Socal Loan. In addition, the Trust provided the purchaser under the repurchase facility a guaranty for customary “bad-boy” acts, including bankruptcy, fraud or intentional misrepresentation, bad faith contesting of a claim by the purchaser under the repurchase facility, liens on the C-Note, and misappropriation of funds. In addition, the Trust agreed to guaranty all interest payments under the repurchase facility during its term. The Trust’s joint venture partner, New Valley LLC, has agreed to reimburse and indemnify us for its proportionate share of any payments required to be made by us on account of the guarantees provided by us.

Sullivan Center—On February 3, 2012 the Trust acquired through its venture with Elad the first mortgage loan secured by Sullivan Center, Chicago, Illinois for a purchase price of approximately $128,000,000. In connection with the consummation of the transaction, the Trust formed two substantially identical 50/50 joint ventures with Elad; one to hold a mezzanine loan (“ML joint venture”), and the other to hold a future profits participation interest in the mezzanine loan borrower, (“PP joint venture”). Upon acquisition, the original loan was restructured into: (i) a $100,000,000 non-recourse mortgage loan provided by a third party lender; (ii) a $47,500,000 mezzanine loan (inclusive of additional advances for reserves, property expenses and transaction costs) held by the ML joint venture; and (iii) a profits participation in the property held by the PP joint venture.

The $100,000,000 non-recourse mortgage loan has a three year term, is prepayable without premium after 20 months, bears interest at 11% per annum, of which up to 3% accrues, and requires payments of interest only. The lender has also agreed to provide up to an additional $8,650,000 in additional advances for tenant improvements, leasing commissions and capital expenditures. This loan is a bridge facility to be used for the completion of the property’s lease-up.

The $47,500,000 mezzanine loan has a six year term, bears interest at 15% per annum, 5% of which accrues on a compounded basis, and requires payments of interest only. If the mezzanine loan is not satisfied at maturity or an event of default occurs, the borrower is required to pay an additional $18,000,000 together with a 15% compounded return on such amount, which represents the discount on the purchase price paid by the ML joint venture and the PP joint venture together with accrued default interest and expenses. In addition, the ML joint venture has agreed to provide approximately $4,400,000 to fund the costs associated with the completion of the build out of its two retail anchors, Target and DSW, as well as for 80% of additional tenant improvements, leasing commissions and capital expenditures not funded under the mortgage loan. Both the interest rate and compounded return are subject to adjustment as described below.

The PP joint venture acquired a 65% future profits participation. The profits participation is in excess of all amounts due under the mezzanine loan. If a $3,000,000 principal payment is made on the mezzanine loan on or prior to December 31, 2012, the interest rate and compounded return are increased to 15.5% and the profits participation is decreased to 60%.

Stamford Portfolio Loan—On February 17, 2012, the Trust invested $8,036,000 in a venture with Mack-Cali Realty Corporation that acquired for $40,000,000 a senior mezzanine loan with a fair value of $50,000,000. The mezzanine loan is collateralized by the equity interests in a premier seven building portfolio contanining 1,670,000 square feet of Class A office space and 106 residential rental units totaling 70,500 square feet, all located in the Stamford, Connecticut Central Business District.