Variable Interest Entities

3 Months Ended

Mar. 31, 2023

Variable Interest Entity, Primary Beneficiary, Does Not Hold Majority Voting Interest, Disclosures [Abstract]

15. Variable Interest Entities

Pursuant to GAAP consolidation guidance, the Company consolidates certain VIEs for which the Company is the primary beneficiary. The Operating Partnership is considered a VIE in which the Company is the primary beneficiary because the limited partners do not have substantive kick-out or participating rights. As of March 31, 2023 and December 31, 2022, the Operating Partnership held interests in the Funds and two consolidated entities owning properties that were determined to be VIEs in which the Company is the primary beneficiary as it has (i) the power to direct the activities of the entity that most significantly impact the entity's economic performance, and (ii) the obligation to absorb the entity's losses or receive benefits from the entity that could potentially be significant to the entity.

The majority of the operations of these VIEs are funded with fees earned from investment opportunities or cash flows generated from the properties. The Company has not provided financial support to any of these VIEs that it was not previously contractually required to provide, which consists primarily of funding any capital commitments and capital expenditures, which are deemed necessary to continue to operate the entity and any operating cash shortfalls the entity may experience.

Since the Company conducts its business through and substantially all of its interests are held by the Operating Partnership, the assets and liabilities on the consolidated balance sheets represent the assets and liabilities of the Operating Partnership. As of March 31, 2023 and December 31, 2022, the consolidated balance sheets include the following assets and liabilities of the consolidated VIEs of the Operating Partnership:


(dollars in thousands)	March 31, 2023		December 31, 2022
VIE ASSETS
Operating real estate, net	$	1,532,531	$	1,466,381
Real estate under development		61,811		129,888
Investments in and advances to unconsolidated affiliates		109,106		210,922
Other assets, net		87,587		98,675
Right-of-use assets - operating leases, net		2,431		2,535
Cash and cash equivalents		13,745		13,330
Restricted cash		14,183		14,995
Rents receivable, net		16,552		17,915
Total VIE assets (a)	$	1,837,946	$	1,954,641

VIE LIABILITIES
Mortgage and other notes payable, net	$	759,926	$	761,166
Unsecured notes payable, net		1,839		51,202
Accounts payable and other liabilities		98,716		95,385
Lease liability - operating leases, net		2,548		2,657
Total VIE liabilities (a)	$	863,029	$	910,410

(a)

At March 31, 2023 and December 31, 2022, includes total VIE assets of $678.9 million and $678.1 million, respectively, and total VIE liabilities of $206.6 million and $200.4 million, respectively, related to third-party mortgages that are collateralized by the real estate assets of City Point, a Fund II property, and 27 East 61st Street, 801 Madison Avenue, and 1035 Third Avenue, all Fund IV properties, of which $72.5 million is guaranteed by the Operating Partnership (Note 7). The remaining VIE assets are generally encumbered by third-party non-recourse mortgage debt and are collateral under the respective mortgages and are therefore restricted and can only be used to settle the corresponding liabilities of the VIE. The remaining VIE assets may only be used to settle obligations of these consolidated VIEs and the remaining VIE liabilities are only the obligations of these consolidated VIEs and they do not have recourse to the Operating Partnership or the Company.

The Company also holds variable interest in certain VIEs which are not consolidated as it is determined that the Company is not the primary beneficiary (Note 4). The Company's involvement with such entities is in the form of direct and indirect equity interests and fee arrangements. The maximum exposure to loss is limited to the amount of the Company's equity investment in these VIEs, except with regard to the Company's remaining $3.2 million construction commitment related to its investment in 1238 Wisconsin. The Company's aggregate investment in the unconsolidated VIEs assets was $43.0 million and $41.5 million at March 31, 2023 and December 31, 2022, respectively. The Company's aggregate investment in unconsolidated VIE liabilities was $50.4 million and $49.2 million at March 31, 2023 and December 31, 2022, respectively.