NEW VALLEY LLC

Residential Brokerage Business Acquisition. New Valley is engaged in the real estate business and is seeking to acquire additional real estate properties and operating companies. The Company owns a 70.59% interest in Douglas Elliman and the condensed consolidated financial statements of the Company include the account balances of Douglas Elliman.

Investments in real estate ventures. New Valley also holds equity investments in various real estate projects domestically and internationally. The components of “Investments in real estate ventures” were as follows:



	June 30, 2015		December 31, 2014

Milanosesto Holdings (Sesto Holdings)	$	5,037	$	5,037
Land Development	5,037		5,037

10 Madison Square Park West (1107 Broadway)	7,407		6,383
The Marquand	13,500		12,000
11 Beach Street	12,004		12,328
20 Times Square (701 Seventh Avenue)	12,737		12,481
111 Murray Street	27,203		27,319
357 West (160 Leroy Street)	1,753		1,467
PUBLIC Chrystie House (Chrystie Street)	5,297		3,300
The Dutch (25-19 43rd Avenue)	980		733
Queens Plaza (23-10 Queens Plaza South)	11,146		11,082
87 Park (8701 Collins Avenue)	5,736		6,144
125 Greenwich Street	9,110		9,308
West Hollywood Edition (9040 Sunset Boulevard)	5,604		5,604
76 Eleventh Avenue	17,000		—
Monad Terrace	6,200		—
Condominium and Mixed Use Development	135,677		108,149

Maryland Portfolio	2,916		3,234
ST Portfolio	16,910		15,283
Apartment Buildings	19,826		18,517

Park Lane Hotel	19,529		19,341
Hotel Taiwana	8,206		7,629
Coral Beach and Tennis Club	3,025		2,816
Hotels	30,760		29,786

The Plaza at Harmon Meadow	5,958		—
Commercial	5,958		—

Other	1,768		1,971

Investments in real estate ventures	$	199,026	$	163,460

Condominium and Mixed Use Development:

Condominium and mixed use developments investments range in ownership percentage from 5% to 49.5%. New Valley recorded net equity income of $138 and $675 for the three and six months ended June 30, 2015, respectively. The $675 equity income for the six months ended June 30, 2015 was primarily related to New Valley's proportionate share of three units at the Marquand offset by equity losses from the other condominiums and mixed use development projects. New Valley recorded equity income of $7 and $2,299 for the three and six months ended June 30, 2014, respectively. The $2,299 equity income for the six months ended June 30, 2014 was primarily related to the sale of a commercial unit at 10 Madison Square Park West.

During the six months ended June 30, 2015, New Valley made capital contributions totaling $27,091 primarily related to 76 Eleventh Avenue and Monad Terrace. During the six months ended June 30, 2014, New Valley made capital contributions totaling $10,737 related to 11 Beach Street, 111 Murray Street, PUBLIC Chrystie House, Queens Plaza and 20 Times Square. New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's investment percentages did not change.

During the six months ended June 30, 2015, New Valley received a distribution of $236 from its investment in Chelsea Eleven, which sold its last unit in 2012, for excess amounts held back in 2012 for final expenses of the investment. During the six months ended June 30, 2014, New Valley received distributions of $5,189 primarily related to 10 Madison Square Park West, 11 Beach Street and 20 Times Square.

New Valley's maximum exposure to loss, net of non-controlling interest, as a result of its investments in condominium and mixed use developments was $132,842 at June 30, 2015.

Apartment Buildings:

Apartment buildings investments range in ownership percentage from 7.6% to 16.3%. New Valley recorded equity income of $1,848 and $1,801 for the three and six months ended June 30, 2015, respectively, primarily related to the ST Portfolio apartment portfolio. In 2015, ST Portfolio sold one (Phoenix, Arizona) of its three remaining Class A multi-family buildings and the proceeds were used to pay down debt. New Valley recorded net equity losses of $217 and $164 for the three and six months ended June 30, 2014, respectively, primarily related to equity losses of ST Portfolio. New Valley received distributions of $493 and $250 during the six months ended June 30, 2015 and 2014, respectively, primarily related to NV Maryland. New Valley's maximum exposure to loss as a result of its investment in apartment buildings was $19,826 at June 30, 2015.

Hotels:

Hotel investments range in ownership percentage from 5% to 49%. New Valley recorded net equity losses of $261 and $1,006 for the three and six months ended June 30, 2015, respectively, related to hotel operations. New Valley recorded net equity losses of $857 and $2,171 for the three and six months ended June 30, 2014, respectively. New Valley made capital contributions totaling $1,980 for the six months ended June 30, 2015, primarily related to Coral Beach and Tennis Club and Park Lane. New Valley made capital contributions totaling $589 for the six months ended June 30, 2014, primarily related to Coral Beach. New Valley's maximum exposure to loss as a result of its investments in hotels was $30,760 at June 30, 2015.

Commercial:

Commercial ventures include a contribution by New Valley of $5,931 for a 49% interest in a joint venture which purchased a shopping center, The Plaza at Harmon Meadow, in New Jersey at the end of March 2015. The joint venture is a variable interest entity, however, New Valley is not the primary beneficiary of the joint venture. New Valley will account for its interest in the joint venture under the equity method of accounting. New Valley recorded equity income of $27 for the three and six months ended June 30, 2015 related to shopping center rental operations. New Valley's maximum exposure to loss as a result of its investments in commercial ventures was $5,958 at June 30, 2015.

Other:

Other investments in real estate ventures relate to an investment in a mortgage company and an insurance company partially owned by Douglas Elliman.

Real Estate Held for Sale:

The components of “Real estate held for sale, net” were as follows:



	June 30, 2015		December 31, 2014
Escena, net	$	10,541	$	10,643
Sagaponack	12,502		—
Real estate held for sale, net	$	23,043	$	10,643

Escena. The assets of “Escena, net” are as follows:



	June 30, 2015			December 31, 2014
Land and land improvements	$	8,953		$	8,953
Building and building improvements	1,873			1,865
Other	1,575			1,568
	12,401			12,386
Less accumulated depreciation	(1,860		)	(1,743		)
	$	10,541		$	10,643

New Valley recorded operating losses of $173 and $287 for the three months ended June 30, 2015 and 2014, respectively, from Escena. New Valley recorded operating income of $552 and $233 for the six months ended June 30, 2015 and 2014, respectively, from Escena.

Investment in Indian Creek. In March 2013, New Valley invested $7,616 for an 80% interest in Timbo LLC (“Indian Creek”) which owns a residential real estate project located on Indian Creek, Florida. As a result of the 80% ownership interest, the consolidated financial statements of the Company included the balances of Indian Creek.

In May 2014, the Indian Creek property was sold for $14,400 and New Valley received a distribution of approximately $7,100. New Valley recognized income of approximately $2,400 from the sale for the three and six months ended June 30, 2014.

Investment in Sagaponack. In April 2015, New Valley invested $12,502 in a residential real estate project located in Sagaponack, NY. The project is wholly owned and the balances of the project are included in the consolidated financial statements of the Company. As of June 30, 2015, the assets of Sagaponack consist of land and land improvements of $12,502.