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Investments in Partially Owned Entities
3 Months Ended
Mar. 31, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Partially Owned Entities Investments in Partially Owned Entities

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX)

As of March 31, 2019, we own 1,654,068 Alexander’s common shares, or approximately 32.4% of Alexander’s common equity. We manage, lease and develop Alexander’s properties pursuant to agreements which expire in March of each year and are automatically renewable.

As of March 31, 2019, the market value ("fair value" pursuant to ASC 820) of our investment in Alexander’s, based on Alexander’s March 29, 2019 quarter ended closing share price of $376.17, was $622,211,000, or $515,425,000 in excess of the carrying amount on our consolidated balance sheet. As of March 31, 2019, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $39,097,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income. The basis difference related to the land will be recognized upon disposition of our investment.

Urban Edge Properties (“UE”) (NYSE: UE)

On March 4, 2019, we converted to common shares and sold all of our 5,717,184 partnership units of UE, realizing net proceeds of $108,512,000. The sale resulted in a net gain of $62,395,000 which is included in "net gains on disposition of wholly owned and partially owned assets" on our consolidated statements of income for the three months ended March 31, 2019.

61 Ninth Avenue

On January 28, 2019, the joint venture, in which we have a 45.1% interest, completed a $167,500,000 refinancing of 61 Ninth Avenue, a 166,000 square foot newly constructed office and retail property in the Meatpacking district of Manhattan which is fully leased to Aetna and Starbucks. The seven-year interest only loan carries a rate of LIBOR plus 1.35% (3.85% as of March 31, 2019) and matures in January 2026. We realized net proceeds of approximately $31,000,000. The loan replaces the previous $90,000,000 construction loan that bore interest at LIBOR plus 3.05% and was scheduled to mature in 2021.

Toys "R" Us, Inc. ("Toys")

On September 18, 2017, Toys filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code. In the second quarter of 2018, Toys ceased U.S. operations. On February 1, 2019, the plan of reorganization for Toys "R" Us, Inc., in which we owned a 32.5% interest, was declared effective, and our stock in Toys was canceled. At December 31, 2018, we carried our Toys investment at zero. The canceling of our stock in Toys will result in approximately a $420,000,000 capital loss deduction for tax purposes in 2019 (which if not offset by capital gains will result in a capital loss carry over available for five years).


7.
Investments in Partially Owned Entities - continued

Below is a schedule summarizing our investments in partially owned entities.
(Amounts in thousands)
Percentage Ownership at
March 31, 2019
 
Balance as of
 
 
March 31, 2019
 
December 31, 2018
Investments:
 
 
 
 
 
Partially owned office buildings/land(1)
Various
 
$
478,240

 
$
499,005

Alexander’s
32.4%
 
106,786

 
107,983

PREIT(2)
N/A
 

 
59,491

UE(3)
N/A
 

 
45,344

Other investments(4)
Various
 
145,238

 
146,290

 
 
 
$
730,264

 
$
858,113

 
 
 
 
 
 
Investments in partially owned entities included in other liabilities(5):
 
 
 
 
 
330 Madison Avenue
25.0%
 
$
(60,054
)
 
$
(58,117
)
7 West 34th Street
53.0%
 
(51,464
)
 
(51,579
)
85 Tenth Avenue
49.9%
 
(5,857
)
 

 
 
 
$
(117,375
)
 
$
(109,696
)
____________________
(1)
Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 512 West 22nd Street, 61 Ninth Avenue and others.
(2)
On March 12, 2019, we converted all of our PREIT operating partnership units into common shares and began accounting for our investment as a marketable security in accordance with ASC 321 (see Note 6 - Marketable Securities).
(3)
Sold on March 4, 2019 (see page 25 for details).
(4)
Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street and others.
(5)
Our negative basis results from distributions in excess of our investment.

Below is a schedule of net income (loss) from partially owned entities.
(Amounts in thousands)
Percentage
Ownership at
March 31, 2019
 
For the Three Months Ended March 31,
 
 
2019
 
2018
Our share of net income (loss):
 
 
 
 
 
Alexander's (see page 25 for details):
 
 
 
 
 
Equity in net income (loss)(1)
32.4%
 
$
5,717

 
$
(3,209
)
Management, leasing and development fees
 
 
1,057

 
1,208

 
 
 
6,774

 
(2,001
)
Partially owned office buildings(2)
Various
 
106

 
(4,283
)
Other investments(3)
Various
 
440

 
(3,620
)
 
 
 
$
7,320

 
$
(9,904
)
____________________
(1)
2018 includes our $7,708 share of Alexander's disputed additional Transfer Tax related to the November 2012 sale of Kings Plaza Regional Shopping Center based on the precedent established by the Tax Tribunal's decision regarding One Park Avenue (see Note 5 - Real Estate Fund Investments).
(2)
Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 7 West 34th Street, 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others. 2018 includes our $4,978 share of disputed additional Transfer Tax related to the March 2011 acquisition of One Park Avenue (see Note 5 - Real Estate Fund Investments).
(3)
Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, Rosslyn Plaza, 50-70 West 93rd Street, 666 Fifth Avenue Office Condominium (sold on August 3, 2018), UE (sold on March 4, 2019), PREIT (accounted as a marketable security from March 12, 2019) and others.