New Valley LLC

3 Months Ended

Mar. 31, 2012

Investments [Abstract]

NEW VALLEY LLC

NEW VALLEY LLC

The components of “Investments in non-consolidated real estate businesses” were as follows:

	March 31, 2012		December 31, 2011
Douglas Elliman Realty LLC	$	53,089	$	53,970
New Valley Oaktree Chelsea Eleven LLC	7,273		6,320
Fifty Third-Five Building LLC	18,000		18,000
Sesto Holdings S.r.l.	5,037		5,037
1107 Broadway	5,489		5,489
Lofts 21 LLC	900		900
Hotel Taiwana	2,658		2,658
NV SOCAL LLC	24,846		25,095
HFZ East 68th Street	7,000		7,000
Investments in non-consolidated real estate businesses	$	124,292	$	124,469

Residential Brokerage Business. New Valley LLC ("New Valley") accounts for its 50% interest in Douglas Elliman Realty LLC under the equity method of accounting. New Valley recorded income of $1,444 and $3,404 for the three months ended March 31, 2012 and 2011, respectively, associated with Douglas Elliman Realty, LLC. New Valley received cash distributions from Douglas Elliman Realty, LLC of $2,325 and $1,075 for the three months ended March 31, 2012 and 2011, respectively. The summarized financial information of Douglas Elliman Realty, LLC is as follows:

	March 31, 2012		December 31, 2011
Cash	$	50,358	$	57,450
Other current assets	5,736		3,293
Property, plant and equipment, net	14,345		14,595
Trademarks	21,663		21,663
Goodwill	38,497		38,742
Other intangible assets, net	1,082		827
Other non-current assets	3,440		3,096
Notes payable - current	417		602
Other current liabilities	12,698		18,734
Notes payable - long term	598		1,104
Other long-term liabilities	9,734		9,490
Members' equity	111,674		109,736

	Three Months Ended
	March 31,
	2012		2011
Revenues	$	71,175	$	78,044
Costs and expenses	69,226		71,501
Depreciation expense	815		936
Amortization expense	60		63
Other income	742		977
Interest expense, net	23		42
Income tax expense	54		199
Net income	$	1,739	$	6,280

New Valley Oaktree Chelsea Eleven, LLC. As of March 31, 2012, 52 of the 54 residential units were closed. In April 2012, Chelsea closed on the two remaining residential units. In April 2012, the Company received a distribution of $7,604 from the sale of the two remaining residential units.

New Valley recorded equity income of $1,667 and $1,500 for the three months ended March 31, 2012 and 2011, respectively, related to New Valley Chelsea. The Company's maximum exposure to loss as a result of its investment in New Valley Chelsea Eleven LLC is $7,273 at March 31, 2012.

The Company received net distributions of $715 and $1,393 from New Valley Oaktree Chelsea Eleven LLC for the three months ended March 31, 2012 and 2011, respectively.

Fifty Third-Five Building LLC.  In 2010, New Valley, through its NV 955 LLC subsidiary, contributed $18,000 to a joint venture, Fifty Third-Five Building LLC (“JV”), of which it owns 50%.  In 2010, the JV acquired a defaulted real estate loan, collateralized by real estate located in New York City for approximately $35,500.  The previous lender had commenced proceedings seeking to foreclose its mortgage. Upon acquisition of the loan, the JV succeeded to the rights of the previous lender in the litigation.  In April 2011, the court granted the JV's motion for summary judgment, dismissing certain substantive defenses raised by the borrower and the other named parties. Thereafter, the borrower challenged the validity of the assignment from the previous lender to the JV. In February 2012, the court affirmed the validity of the assignment and its decision to grant summary judgment. Foreclosure proceedings are continuing.

The JV is a variable interest entity; however, New Valley is not the primary beneficiary. This investment is being accounted for under the equity method of accounting. The Company’s maximum exposure to loss as a result of its investment in the JV is $18,000 at March 31, 2012.

Sesto Holdings S.r.l.  In October 2010, New Valley, through its NV Milan LLC subsidiary, acquired a 7.2% interest in Sesto Holdings S.r.l. for $5,000. Sesto holds a 42% interest in an entity that has purchased a land plot of approximately 322 acres in Milan, Italy. Sesto intends to develop the land plot as a multi-parcel, multi-building mixed use urban regeneration project. Sesto is a variable interest entity; however, New Valley is not the primary beneficiary. New Valley accounts for Sesto under the equity method of accounting. The Company’s maximum exposure to loss as a result of its investment in Sesto is $5,037 at March 31, 2012.

Lofts 21 LLC.  In February 2011, New Valley invested $900 for an approximate 12% interest in Lofts 21 LLC.  Lofts 21 LLC acquired an existing property in Manhattan, NY, which is scheduled to be developed into condominiums.  New Valley accounts for Lofts 21 LLC under the equity method of accounting. Lofts 21 LLC is a variable interest entity; however, New Valley is not the primary beneficiary. The Company's maximum exposure to loss as a result of this investment is $900 at March 31, 2012.

1107 Broadway.  During 2011, New Valley invested $5,489 for an approximate indirect 5% interest in MS/WG 1107 Broadway Holdings LLC. In September 2011, MS/WG 1107 Broadway Holdings LLC acquired the 1107 Broadway property in Manhattan, NY. The joint venture plans to develop the property, which was formerly part of the International Toy Center, into luxury residential condominiums with ground floor retail space.  New Valley accounts for MS/WG 1107 Broadway Holdings LLC under the equity method of accounting. MS/WG 1107 Broadway Holdings LLC is a variable interest entity; however, New Valley is not the primary beneficiary. The Company's maximum exposure on its investment in MS/WG 1107 Broadway Holdings LLC is $5,489 at March 31, 2012.

Hotel Taiwana. In October 2011, New Valley invested $2,658 for an approximate 17.39% interest in Hill Street Partners LLP ("Hill"). Hill purchased a 37% interest in Hill Street SEP ("Hotel Taiwana") which owns a hotel located in St. Barts, French West Indies. The hotel consists of 30 suites, 6 pools, a restaurant, lounge and gym. The purpose of the investment is to renovate and the sell the hotel in its entirety or as hotel-condos. The investment is a variable interest entity; however, New Valley is not the primary beneficiary. New Valley accounts for this investment under the equity method of accounting. The Company’s maximum exposure to loss as a result of its investment in Hotel Taiwana is $2,658 at March 31, 2012.

NV SOCAL LLC. On October 28, 2011, a newly-formed joint venture, between affiliates of New Valley and Winthrop Realty Trust, entered into an agreement with Wells Fargo Bank to acquire a $117,900 C-Note (the “C-Note”) for a purchase price of $96,700.  The C-Note is the most junior tranche of a $796,000 first mortgage loan originated in July 2007 which is collateralized by a 31 property portfolio of office properties situated throughout southern California, consisting of approximately 4.5 million square feet.  The C-Note bears interest at a rate per annum of LIBOR plus 310 basis points, requires payments of interest only prior to maturity and matures on August 9, 2012.  On November 3, 2011, New Valley invested $25,000 for an approximate 26% interest in the joint venture. In January 2012, the joint venture entered into a Master Repurchase and Securities contract with BSSF CABI LLC, an affiliate of Blackstone Real Estate Debt Strategies. This transaction secured $40,000 through a non-recourse repurchase facility and all proceeds after expenses (approximately $38,100) were distributed to Winthrop Realty Trust. This distribution increased the Company's ownership interest to approximately 42.19% in the joint venture.

The investment is a variable interest entity; however, New Valley is not the primary beneficiary. New Valley accounts for this investment under the equity method of accounting. New Valley recorded an equity loss of $248 for the three months ended March 31, 2012. The Company’s maximum exposure to loss as a result of its investment in NV SOCAL LLC is $24,846 at March 31, 2012.

HFZ East 68th Street. In December 2011, New Valley invested $7,000 for an approximate 18% interest in a condominium conversion project. The building is a 12-story, 105,000 square foot residential rental building located on 68th Street between Fifth Avenue and Madison Avenue in Manhattan, NY. The investment is a variable interest entity; however, New Valley is not the primary beneficiary. New Valley accounts for this investment under the equity method of accounting. The Company’s maximum exposure to loss as a result of its investment in HFZ East 68th Street is $7,000.

Consolidated real estate investments:

Aberdeen Townhomes LLC. In February 2011, Aberdeen sold one of its two remaining townhomes for $11,635 and recorded a gain on sale of townhome of $3,135 for the three months ended March 31, 2011 . The remaining townhome was sold in June 2011.

Investment in Escena. The components of the Company's investment in Escena are as follows:

	March 31, 2012			December 31, 2011
Land and land improvements	$	11,245		$	11,245
Building and building improvements	1,525			1,525
Other	1,237			1,208
	14,007			13,978
Less accumulated depreciation	(771		)	(698		)
	$	13,236		$	13,280

The Company recorded operating income of approximately $610 and $467 for the three months ended March 31, 2012 and 2011, respectively, from its investment in Escena.