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:



	September 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)	9,522		6,383
The Marquand	13,900		12,000
11 Beach Street	11,928		12,328
20 Times Square (701 Seventh Avenue)	13,095		12,481
111 Murray Street	16,114		27,319
357 West (160 Leroy Street)	1,950		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)	14,732		11,082
87 Park (8701 Collins Avenue)	5,654		6,144
125 Greenwich Street	11,193		9,308
West Hollywood Edition (9040 Sunset Boulevard)	5,604		5,604
76 Eleventh Avenue	17,000		—
Monad Terrace	6,438		—
Condominium and Mixed Use Development	133,407		108,149

Maryland Portfolio	1,377		3,234
ST Portfolio	16,881		15,283
Apartment Buildings	18,258		18,517

Park Lane Hotel	19,373		19,341
Hotel Taiwana	7,337		7,629
Coral Beach and Tennis Club	3,023		2,816
Hotels	29,733		29,786

The Plaza at Harmon Meadow	5,638		—
Commercial	5,638		—

Other	1,979		1,971

Investments in real estate ventures	$	194,052	$	163,460

Condominium and Mixed-Use Development:

Condominium and mixed-use development investments range in ownership percentage from 5% to 49.5%. New Valley recorded net equity income of $248 and $923 for the three and nine months ended September 30, 2015, respectively. The $923 equity income for the nine months ended September 30, 2015 was primarily related to New Valley's proportionate share of the Marquand’s equity earnings from the sale of five units offset by equity losses from the other condominiums and mixed-use development projects. New Valley recorded equity income of $5,090 and $7,389 for the three and nine months ended September 30, 2014, respectively. The Company recorded $5,000 of equity income related to its proportionate share of the Marquand’s equity earnings from the sale of approximately 40% of its units during the quarter and $2,254 of equity income primarily related to the sale of a commercial unit at 10 Madison Square Park West for the nine months ended September 30, 2014.

During the nine months ended September 30, 2015, New Valley made capital contributions totaling $35,776 related to ventures where New Valley previously held an investment, primarily at 10 Madison Square Park West, Queens Plaza and 125 Greenwich Street, and the new ventures 76 Eleventh Avenue and Monad Terrace. For ventures where New Valley previously held an investment, New Valley contributed its proportionate share of additional capital along with contributions by the other investment partners. New Valley's direct investment percentage did not change. During the nine months ended September 30, 2014, New Valley made capital contributions totaling $27,225 primarily related to 111 Murray Street, Queens Plaza and 125 Greenwich Street. 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.

In May 2015, New Valley purchased a 5.1% interest in 76 Eleventh Avenue for $17,000. The joint venture related to 76 Eleventh Avenue is a variable interest entity, however, New Valley is not the primary beneficiary. New Valley accounts for its interest in the joint venture under the equity method of accounting. New Valley's maximum exposure to loss as a result of its investment in 76 Eleventh Avenue as of September 30, 2015 is $17,000.

In May and June 2015, New Valley purchased a 31.3% interest in Monad Terrace for $6,200. The joint venture related to Monad Terrace is a variable interest entity, however, New Valley is not the primary beneficiary of the joint venture. New Valley accounts for its interest in the joint venture under the equity method of accounting. New Valley's maximum exposure to loss as a result of its investment in Monad Terrace as of September 30, 2015 is $6,438.

During the nine months ended September 30, 2015, New Valley received distributions of $11,441 primarily related to a return of capital from 111 Murray Street. The return of capital primarily resulted from the admittance of a new limited partner in 111 Murray Street. The admittance of the new limited partner reduced New Valley's interest in the overall joint venture from 25% to 9.5%. New Valley recognized equity income of $344 as a result of the transaction, offsetting the equity loss of $344 recognized during the year. During the nine months ended September 30, 2014, New Valley received distributions of $4,547 primarily related to 10 Madison Square Park West, 125 Greenwich Street, 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 $130,027 at September 30, 2015.

Apartment Buildings:

Apartment building investments range in ownership percentage from 7.6% to 16.3%. New Valley recorded an equity loss of $72 for the three months ended September 30, 2015 and equity income of $1,730 for the nine months ended September 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 retire debt. New Valley recorded equity losses of $87 and $251 for the three and nine months ended September 30, 2014, respectively, primarily related to equity losses of ST Portfolio. New Valley received distributions of $1,989 and $375 during the nine months ended September 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 $18,258 at September 30, 2015.

Hotels:

Hotel investments range in ownership percentage from 5% to 49%. New Valley recorded equity losses of $1,323 and $2,330 for the three and nine months ended September 30, 2015, respectively, related to hotel operations. New Valley recorded equity losses of $2,053 and $4,222 for the three and nine months ended September 30, 2014, respectively. New Valley made capital contributions totaling $2,277 for the nine months ended September 30, 2015, primarily related to Coral Beach and Tennis Club and Park Lane Hotel. New Valley made capital contributions totaling $1,973 for the nine months ended September 30, 2014, primarily related to Coral Beach. New Valley's maximum exposure to loss as a result of its investments in hotels was $29,733 at September 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 $20 and $47 for the three and nine months ended September 30, 2015 related to shopping center rental operations. New Valley received distributions totaling $340 for the nine months ended September 30, 2015, related to Harmon Meadow. New Valley's maximum exposure to loss as a result of its investments in commercial ventures was $5,638 at September 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:



	September 30, 2015		December 31, 2014
Escena, net	$	10,451	$	10,643
Sagaponack	12,512		—
Real estate held for sale, net	$	22,963	$	10,643

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



	September 30, 2015			December 31, 2014
Land and land improvements	$	8,902		$	8,953
Building and building improvements	1,873			1,865
Other	1,596			1,568
	12,371			12,386
Less accumulated depreciation	(1,920		)	(1,743		)
	$	10,451		$	10,643

New Valley recorded operating losses of $779 and $804 for the three months ended September 30, 2015 and 2014, respectively, from Escena. New Valley recorded operating losses of $227 and $571 for the nine months ended September 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 nine months ended September 30, 2014.

Investment in Sagaponack. In April 2015, New Valley has 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 September 30, 2015, the assets of Sagaponack consist of land and land improvements of $12,512.