New Valley LLC

9 Months Ended

Sep. 30, 2020

Real Estate [Abstract]

New Valley LLC

NEW VALLEY LLC

Investments in real estate ventures:

The components of “Investments in real estate ventures” were as follows:

	Range of Ownership (1)	September 30, 2020		December 31, 2019
Condominium and Mixed Use Development:
New York City Standard Metropolitan Statistical Area (“SMSA”)	3.1% - 49.5%	$	36,252	$	51,078
All other U.S. areas	15.0% - 77.8%	41,403		55,842
		77,655		106,920
Hotels:
New York City SMSA	1.0% - 18.4%	2,892		2,462
International	49.0%	1,767		2,161
		4,659		4,623
Commercial:
New York City SMSA	49.0%	2,271		1,852
All other U.S. areas	1.6%	6,987		7,634
		9,258		9,486
Other:	15.0% - 49.0%	10,886		10,527
Investments in real estate ventures		$	102,458	$	131,556

______________________

(1) The Range of Ownership reflects New Valley’s estimated current ownership percentage. New Valley’s actual ownership percentage as well as the percentage of earnings and cash distributions may ultimately differ as a result of a number of factors including potential dilution, financing or admission of additional partners.

Contributions:

The components of New Valley’s contributions to its investments in real estate ventures were as follows:

	Nine Months Ended
	September 30,
	2020		2019
Condominium and Mixed Use Development:
New York City SMSA	$	1,169	$	21,760
All other U.S. areas	4,176		14,000
	5,345		35,760
Apartment Buildings:
All other U.S. areas	76		—
	76		—
Hotels:
New York City SMSA	294		172
	294		172
Other:	524		337
Total contributions	$	6,239	$	36,269

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 during the nine months ended September 30, 2020 and September 30, 2019. New Valley’s direct investment percentage for these ventures did not significantly change. 

Distributions:

The components of distributions received by New Valley from its investments in real estate ventures were as follows:

	Nine Months Ended
	September 30,
	2020		2019
Condominium and Mixed Use Development:
New York City SMSA	$	1,735	$	3,380
All other U.S. areas	11,060		1,279
	12,795		4,659
Apartment Buildings:
All other U.S. areas	—		79
	—		79
Hotels:
New York City SMSA	—		21,572
	—		21,572
Commercial:
New York City SMSA	591		13
All other U.S. areas	113		160
	704		173
Other	26		8,088
Total distributions	$	13,525	$	34,571

Of the distributions received by New Valley from its investment in real estate ventures, $1,919 and $3,637 were from distributions of earnings for the nine months ended September 30, 2020 and 2019, respectively, and $11,606 and $30,934 were a return of capital for the nine months ended September 30, 2020 and 2019, respectively. Distributions from earnings are included in cash from operations in the condensed consolidating statements of cash flows, while distributions that are returns of capital are included in cash flows from investing activities in the condensed consolidating statements of cash flows.

Equity in (Losses) Earnings from Real Estate Ventures:

New Valley recognized equity in (losses) earnings from real estate ventures as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Condominium and Mixed Use Development:
New York City SMSA	$	(6,835)	$	2,099	$	(15,286)	$	(1,127)
All other U.S. areas (1)	(618)		4,600		(9,906)		2,234
	(7,453)		6,699		(25,192)		1,107
Apartment Buildings:
All other U.S. areas (1)	(208)		76		(284)		79
	(208)		76		(284)		79
Hotels:
New York City SMSA (1)	(1,119)		(102)		(1,768)		8,132
International	157		434		(394)		70
	(962)		332		(2,162)		8,202
Commercial:
New York City SMSA	783		(149)		1,010		114
All other U.S. areas	(519)		146		(534)		517
	264		(3)		476		631
Other:	(177)		946		(139)		1,983
Equity in (losses) earnings from real estate ventures	$	(8,536)	$	8,050	$	(27,301)	$	12,002

______________________

(1) The Company recognized a liability, classified in Other current liabilities, of $1,302 as a result of recording equity in losses in excess of the joint ventures' carrying value.

During the nine months ended September 30, 2019, New Valley’s Park Lane joint venture sold 80.0% of its interest in the Park Lane Hotel, a hotel located in the New York City SMSA. New Valley recognized equity in earnings of $10,328 from the sale and received distributions of $20,788 for the nine months ended September 30, 2019. The sale reduced New Valley’s direct ownership percentage of the Park Lane Hotel from 5.2% to 1.0%. New Valley continues to account for its investment in the joint venture under the equity method of accounting because its ownership percentage in its direct investment continues to meet the threshold for equity method accounting.

As part of the Company’s ongoing assessment of the carrying values of its investments in real estate ventures, the Company determined that the fair value of three of its New York City SMSA Condominium and Mixed Use Development ventures were less than their carrying value as of September 30, 2020. The Company determined that the impairments were other than temporary. The Company recorded impairment charges as a component of equity in losses from real estate ventures of $6,617 and $10,401 for the three and nine months ended September 30, 2020.

As part of the Company’s ongoing assessment of the carrying values of its investments in real estate ventures, the Company determined that the fair values of three New York City SMSA and one All other U.S. areas Condominium and Mixed Use Development ventures were less than their carrying value as of September 30, 2019. The Company determined that the impairmentw were other than temporary. The Company recorded impairment charges as a component of equity in earnings from real estate ventures of $4,445 and $8,311 for the three and nine months ended September 30, 2019.

VIE Consideration:

The Company has determined that New Valley is the primary beneficiary of two real estate ventures because it controls the activities that most significantly impact economic performance of each of the two real estate ventures. Consequently, New Valley consolidates these variable interest entities (“VIEs”).

The carrying amount of the consolidated assets of the VIEs was $0 and $897 as of September 30, 2020 and December 31, 2019, respectively. Those assets are owned by the VIEs, not the Company. Neither of the two consolidated VIEs had recourse liabilities as of September 30, 2020 and December 31, 2019. A VIE’s assets can only be used to settle obligations of that VIE. The VIEs are not guarantors of the Company’s senior notes and other debts payable.

For the remaining investments in real estate ventures, New Valley determined that the entities were VIEs but New Valley was not the primary beneficiary. Therefore, New Valley’s investment in such real estate ventures has been accounted for under the equity method of accounting.

Maximum Exposure to Loss:

New Valley’s maximum exposure to loss from its investments in real estate ventures consisted of the net carrying value of the venture adjusted for any future capital commitments and/or guarantee arrangements. The maximum exposure to loss was as follows:

	September 30, 2020
Condominium and Mixed Use Development:
New York City SMSA	$	36,252
All other U.S. areas	41,403
	77,655
Hotels:
New York City SMSA	2,892
International	1,767
	4,659
Commercial:
New York City SMSA	2,271
All other U.S. areas	6,987
	9,258
Other	24,461
Total maximum exposure to loss	$	116,033

New Valley capitalized $932 and $3,188 of interest costs into the carrying value of its ventures whose projects were currently under development for the three and nine months ended September 30, 2020. New Valley capitalized $1,703 and $4,706 of interest costs into the carrying value of its ventures whose projects were currently under development for the three and nine months ended September 30, 2019.

Douglas Elliman is engaged by certain developers as a broker for several of the real estate ventures that New Valley invests in. Douglas Elliman earned gross commissions of approximately $8,829 and $15,394 from these projects for the nine months ended September 30, 2020 and 2019, respectively.

Investments in Real Estate, net:

The components of “Investments in real estate, net” were as follows:

	September 30, 2020		December 31, 2019
Escena, net	$	9,786	$	9,972
Sagaponack	—		18,345
Investments in real estate, net	$	9,786	$	28,317

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

	September 30, 2020		December 31, 2019
Land and land improvements	$	8,911	$	8,910
Building and building improvements	1,926		1,926
Other	1,670		1,659
	12,507		12,495
Less accumulated depreciation	(2,721)		(2,523)
	$	9,786	$	9,972

New Valley recorded operating losses of $738 and $965 for the three months ended September 30, 2020 and 2019, respectively, from Escena. New Valley recorded operating losses of $1,010 and $633 for the nine months ended September 30, 2020 and 2019, respectively, from Escena. Escena is a master planned community, golf course, and club house in Palm Springs, California.

Investment in Sagaponack. In April 2015, New Valley invested $12,502 in a residential real estate project located in Sagaponack, NY. In August 2020, New Valley sold the project for $20,500 and recognized the revenue in accordance with the scope of ASC Topic 606 since New Valley has no continuing investment or involvement. The sales were presented as revenues and the cost of the investment as cost of goods sold on the condensed consolidated statements of operations.