Investments in Partially Owned Entities

3 Months Ended

Mar. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

7. Investments in Partially Owned Entities

Toys “R” Us (“Toys”)

As of March 31, 2015, we own 32.6% of Toys. We have not guaranteed any of Toys' obligations and are not committed to provide any support to Toys. Pursuant to ASC 323-10-35-20, we discontinued applying the equity method for our Toys' investment when the carrying amount was reduced to zero in the third quarter of 2014. We will resume application of the equity method if, during the period the equity method has been suspended, our share of unrecognized net income exceeds our share of unrecognized net losses.

In the first quarter of 2014, we recognized our share of Toys' fourth quarter net income of $75,196,000 and a corresponding non-cash impairment loss of the same amount.

Below is a summary of Toys' latest available financial information on a purchase accounting basis:

(Amounts in thousands)			Balance as of
Balance Sheet:			January 31, 2015		November 1, 2014
	Assets		$	9,958,000	$	11,267,000
	Liabilities			9,014,000		10,377,000
	Noncontrolling interests			85,000		82,000
	Toys “R” Us, Inc. equity⁽¹⁾			859,000		808,000

			For the Three Months Ended
Income Statement:			January 31, 2015		February 1, 2014
	Total revenues		$	4,983,000	$	5,267,000
	Net income attributable to Toys			193,700		82,500


(1)		At March 31, 2015, the carrying amount of our investment in Toys is less than our share of Toys' equity by approximately $279,936. This basis difference results primarily from non-cash impairment losses aggregating $355,953 that we have recognized through March 31, 2015. We have allocated the basis difference primarily to Toys' real estate, which is being amortized over its remaining estimated useful life.

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

As of March 31, 2015, 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, 2015, the market value (“fair value” pursuant to ASC 820) of our investment in Alexander's, based on Alexander's March 31, 2015 closing share price of $456.58, was $755,214,000, or $623,071,000 in excess of the carrying amount on our consolidated balance sheet. As of March 31, 2015, the carrying amount of our investment in Alexander's exceeds our share of the equity in the net assets of Alexander's by approximately $41,048,000. 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.

7. Investments in Partially Owned Entities - continued

Alexander's, Inc. (“Alexander's”) (NYSE: ALX) - continued

Below is a summary of Alexander's latest available financial information:

(Amounts in thousands)		Balance as of
Balance Sheet:		March 31, 2015		December 31, 2014
	Assets	$	1,433,000	$	1,423,000
	Liabilities		1,084,000		1,075,000
	Stockholders' equity		349,000		348,000

		For the Three Months Ended March 31,
Income Statement:		2015		2014
	Total revenues	$	52,000	$	49,000
	Net income attributable to Alexander’s		18,000		15,000

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

As part of our spin-off of substantially all of our retail segment to UE on January 15, 2015 (see Note 1 – Organization), we retained 5,717,184 UE operating partnership units, representing a 5.4% ownership interest in UE. We account for our investment in UE under the equity method and will recognize our share of UE's earnings on a one-quarter lag basis. We are providing transition services to UE for an initial period of up to two years, including information technology, human resources, tax and financial reporting. UE is providing us with leasing and property management services for (i) the Monmouth Mall, (ii) certain small retail properties that we plan to sell, and (iii) our affiliate, Alexander's, Rego Park retail assets.

Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI)

On March 31, 2015, we transferred the redeveloped Springfield Town Center, a 1,350,000 square foot mall located in Springfield, Fairfax County, Virginia, to PREIT Associates, L.P., which is the operating partnership of PREIT, in exchange for $485,313,000; comprised of $340,000,000 of cash and 6,250,000 PREIT operating partnership units (valued at $145,313,000 or $23.25 per PREIT unit) (See Note 8 – Dispositions). $19,000,000 of tenant improvements and allowances was credited to PREIT as a closing adjustment. As a result of this transaction, we own an 8.1% interest in PREIT. We account for our investment in PREIT under the equity method and will recognize our share of PREIT's earnings on a one-quarter lag basis.

7. Investments in Partially Owned Entities – continued

Below are schedules summarizing our investments in, and (loss) income from, partially owned entities.

			Percentage
(Amounts in thousands)			Ownership at		Balance as of
Investments:			March 31, 2015		March 31, 2015		December 31, 2014
	Partially owned office buildings⁽¹⁾			Various	$	766,074	$	760,749
	PREIT Associates			8.1%		144,681		-
	Alexander’s			32.4%		132,143		131,616
	India real estate ventures			4.1%-36.5%		67,159		76,752
	Urban Edge			5.4%		25,206		-
	Toys			32.6%		-		-
	Other investments⁽²⁾			Various		272,951		277,379
					$	1,408,214	$	1,246,496


(1)		Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others.
(2)		Includes interests in Independence Plaza, Monmouth Mall, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street and others.

				Percentage		For the Three Months
(Amounts in thousands)				Ownership at		Ended March 31,
Our Share of Net (Loss) Income:				March 31, 2015		2015		2014
	Partially owned office buildings⁽¹⁾				Various	$	(9,296)	$	(2,395)

	Alexander's:
		Equity in net income			32.4%		5,594		4,759
		Management, leasing and development fees					2,097		1,626
							7,691		6,385

	Toys:
		Equity in net income			32.6%		-		75,196
		Non-cash impairment losses					-		(75,196)
		Management fees					1,454		1,847
							1,454		1,847

	Urban Edge⁽²⁾				5.4%		584		-

	India real estate ventures				4.1%-36.5%		(109)		(137)

	Other investments⁽³⁾				Various		(2,729)		(3,721)

						$	(2,405)	$	1,979


(1)			Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue and others.
(2)			Represents fees earned pursuant to our transition services agreement with UE.
(3)			Includes interests in Independence Plaza, Monmouth Mall, 85 Tenth Avenue, Fashion Center Mall, 50-70 West 93rd Street and others.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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