Investments in Unconsolidated Joint Ventures

We have investments in several real estate joint ventures with various partners, including SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, or SITQ, Canada Pension Plan Investment Board, or CPPIB, Prudential Real Estate Investors, or Prudential, Onyx Equities, or Onyx, The Witkoff Group, or Witkoff, Credit Suisse Securities (USA) LLC, or Credit Suisse, Jeff Sutton, or Sutton, Harel Insurance and Finance, or Harel, Louis Cappelli, or Cappelli, The Moinian Group, or Moinian, Vornado Realty Trust (NYSE: VNO), or Vornado, Blackstone Real Estate Partners VII, or Blackstone, Plaza Global Real Estate Partners LP, or Plaza, Angelo Gordon Real Estate Inc., or AG, as well as private investors. All the investments below are voting interest entities, except for 33 Beekman, 3 Columbus Circle and 180/182 Broadway which are VIEs in which we are not the primary beneficiary. Our net equity investment in these three VIEs was $136.7 million and $117.7 million at September 30, 2013 and December 31, 2012, respectively. As we do not control the joint ventures listed below, we account for them under the equity method of accounting.

The table below provides general information on each of our joint ventures as of September 30, 2013 (amounts in thousands):



Property	Partner	Ownership Interest		Economic Interest		Square Feet	Acquired	Acquisition Price(1)
100 Park Avenue	Prudential	49.90	%	49.90	%	834	January 2000	$	95,800
21 West 34th Street	Sutton	50.00	%	50.00	%	30	July 2005	22,400
1604-1610 Broadway(2)	Onyx	70.00	%	70.00	%	30	November 2005	4,400
27-29 West 34th Street	Sutton	50.00	%	50.00	%	41	January 2006	30,000
717 Fifth Avenue	Sutton/Private Investor	10.92	%	10.92	%	120	September 2006	251,900
800 Third Avenue	Private Investors	42.95	%	42.95	%	526	December 2006	285,000
1745 Broadway	Witkoff/SITQ/Lehman Bros.	32.26	%	32.26	%	674	April 2007	520,000
1 and 2 Jericho Plaza	Onyx/Credit Suisse	20.26	%	20.26	%	640	April 2007	210,000
The Meadows	Onyx	50.00	%	50.00	%	582	September 2007	111,500
388 and 390 Greenwich Street(3)	SITQ	50.60	%	50.60	%	2,600	December 2007	1,575,000
180/182 Broadway(4)	Harel/Sutton	25.50	%	25.50	%	71	February 2008	43,600
600 Lexington Avenue	CPPIB	55.00	%	55.00	%	304	May 2010	193,000
11 West 34th Street	Private Investor/Sutton	30.00	%	30.00	%	17	December 2010	10,800
7 Renaissance	Cappelli	50.00	%	50.00	%	37	December 2010	4,000
3 Columbus Circle(5)	Moinian	48.90	%	48.90	%	769	January 2011	500,000
280 Park Avenue	Vornado	50.00	%	49.50	%	1,237	March 2011	400,000
1552-1560 Broadway(6)	Sutton	50.00	%	50.00	%	49	August 2011	136,550
747 Madison Avenue	Harel/Sutton	33.33	%	33.33	%	10	September 2011	66,250
724 Fifth Avenue	Sutton	50.00	%	50.00	%	65	January 2012	223,000
10 East 53rd Street	CPPIB	55.00	%	55.00	%	390	February 2012	252,500
33 Beekman(7)	Harel/Private Investor	45.90	%	45.90	%	145	August 2012	31,000
West Coast office portfolio(8)	Blackstone	42.02	%	43.74	%	4,067	September 2012	880,103
521 Fifth Avenue(9)	Plaza	50.50	%	50.50	%	460	November 2012	315,000
21 East 66th Street(10)	Private Investors	32.28	%	32.28	%	17	December 2012	75,000
315 West 36th Street	Private Investors	35.50	%	35.50	%	148	December 2012	45,000
Herald Center(11)	AG	40.00	%	40.00	%	365	January 2013	50,000

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(1)	Acquisition price represents the actual or implied gross purchase price for the joint venture.


(2)	In March 2013, Sutton conveyed his interest in this property to us.


(3)	The property is subject to a triple-net lease arrangement with a single tenant, which expires in 2020.


(4)	In June 2013, the joint venture completed its redevelopment project and has conveyed a 30-year ground lease condominium interest in the building to Pace University, or Pace, its primary tenant.

(5)

We had an obligation to fund an additional $47.5 million to the joint venture which has been fully funded as of June 30, 2013. As a result of the sale of a condominium interest in September 2012, Young & Rubicam, Inc., or Y&R, owns a portion of the property, generally floors three through eight referred to as Y&R units. As the joint venture has an option to repurchase the Y&R units, no gain was recognized on this transaction.

(6)

In connection with this acquisition, the joint venture also acquired a long-term leasehold interest in the retail space and certain other spaces at 1560 Broadway, which is adjacent to 1552 Broadway. The purchase price relates only to the purchase of the 1552 Broadway interest which comprises 13,045 square feet. In 2012, we, along with Sutton, acquired the property at 155 West 46th Street, which is adjacent to 1552 and 1560 Broadway, and sold it to the fee owner of 1560 Broadway.


(7)	The joint venture acquired the fee interest in the property and will develop an approximately 30 story building for student housing. Upon completion of the development, the joint venture will convey a long-term ground lease condominium interest in the building to Pace.

(8)

Prior to the recapitalization in September 2012, the Company held $26.7 million in mezzanine and preferred equity positions in the entity that owned the portfolio. Following the recapitalization, Blackstone became the majority owner of the joint venture, with Equity Office Properties, a Blackstone affiliate, being responsible for the portfolio’s management and leasing. In February 2013, we acquired Gramercy’s 10.73% interest in the joint venture and simultaneously sold 20.78% of the newly acquired interest to Square Mile Capital Management LLC or Square Mile. During the nine months ended September 30, 2013, we acquired Square Mile’s 6.00% interest in the joint venture and the joint venture sold three of the properties for an aggregate of $224.3 million, on which we recognized a gain of approximately $2.1 million. The proceeds from the sale of these properties were used primarily to repay $194.5 million of the mortgage and $20.5 million of the mezzanine loan.


(9)	Following the sale of our 49.5% partnership interest in 521 Fifth Avenue, we deconsolidated the entity effective November 30, 2012 and have accounted for our investment under the equity method.


(10)	We hold a 32.28% interest in three retail and two residential units at the property and a 16.14% in four residential units at the property.


(11)	The joint venture acquired a preferred equity interest in an entity that holds the interest in a mixed commercial use property located in Manhattan. The preferred equity bears interest at a rate of 8.75% per annum and matures in June 2016.

We generally finance our joint ventures with non-recourse debt. However, in certain cases we have provided guarantees or master leases for tenant space. These guarantees and master leases terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. The first mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at September 30, 2013 and December 31, 2012, respectively, were as follows (amounts in thousands):



Property	Maturity Date	Interest Rate(1)		September 30, 2013		December 31, 2012
100 Park Avenue	September 2014	6.64	%	$	210,427	$	212,287
7 Renaissance	February 2015	10.00	%	1,276		856
11 West 34th Street	January 2016	4.82	%	17,279		17,491
280 Park Avenue	June 2016	6.57	%	708,525		710,000
21 West 34th Street	December 2016	5.76	%	100,000		100,000
1745 Broadway	January 2017	5.68	%	340,000		340,000
1 and 2 Jericho Plaza	May 2017	5.65	%	163,750		163,750
800 Third Avenue	August 2017	6.00	%	20,910		20,910
388 and 390 Greenwich Street(2)	December 2017	3.20	%	996,082		996,082
315 West 36th Street	December 2017	3.16	%	25,000		25,000
717 Fifth Avenue	July 2022	4.45	%	300,000		300,000
21 East 66th Street(3)	April 2023	3.60	%	12,000		12,000
717 Fifth Avenue	June 2024	9.00	%	301,520		294,509
1604-1610 Broadway(4)	—	5.66	%	27,000		27,000
Total fixed rate debt				$	3,223,769	$	3,219,885
180/182 Broadway(5)	December 2013	2.94	%	89,868		71,524
West Coast office portfolio(6)	September 2014	3.93	%	526,290		745,025
747 Madison Avenue	October 2014	2.96	%	33,125		33,125
The Meadows(7)	September 2015	7.75	%	58,212		57,000
3 Columbus Circle(8)	April 2016	2.37	%	241,264		247,253
1552 Broadway(9)	April 2016	3.47	%	143,430		113,869
Other loan payable	June 2016	1.09	%	30,000		30,000
724 Fifth Avenue	January 2017	2.54	%	120,000		120,000
10 East 53rd Street	February 2017	2.69	%	125,000		125,000
33 Beekman(10)	August 2017	2.94	%	18,362		18,362
600 Lexington Avenue	October 2017	2.27	%	121,570		124,384
388 and 390 Greenwich Street(2)	December 2017	1.18	%	142,297		142,297
27-29 West 34th Street(11)	May 2018	2.09	%	53,038		53,375
521 Fifth Avenue	November 2019	2.39	%	170,000		170,000
21 East 66th Street	June 2033	2.88	%	1,978		2,033
16 Court Street(12)				—		84,916
Total floating rate debt				$	1,874,434	$	2,138,163
Total joint venture mortgages and other loans payable				$	5,098,203	$	5,358,048

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(1)	Effective weighted average interest rate for the three months ended September 30, 2013, taking into account interest rate hedges in effect during the period.

(2)

These loans comprised of a $576.0 million mortgage and a $562.4 million mezzanine loan, both of which are fixed rate loans, except for $72.0 million of the mortgage and $70.3 million of the mezzanine loan which are floating. Up to $200.0 million of the mezzanine loan, secured indirectly by these properties, is recourse to us. We believe it is unlikely that we will be required to perform under this guarantee.


(3)	In April 2013, this loan was refinanced at par and its maturity was extended to April 2023.


(4)	This loan went into default in November 2009 due to the non-payment of debt service.


(5)	This loan has a committed amount of $90.0 million.


(6)	As a result of the sale of two of its properties, the joint venture paid down $194.5 million of its mortgage and $20.5 million of its mezzanine loan.


(7)	As of September 30, 2013, $1.8 million of the existing loan remained unfunded.

(8)

This loan has a committed amount of $260.0 million. The joint venture has the ability to increase the mortgage by $40.0 million based on meeting certain performance hurdles. In connection with this obligation, we executed a master lease agreement and our joint venture partner executed a contribution agreement to reflect its pro rata obligation under the master lease. The lien on the mortgage and the master lease excludes the condominium interest owned by Y&R. See Note 5 of prior table.


(9)	In April 2013, we refinanced the previous $119.6 million mortgage with a $200.0 million three-year loan construction financing facility comprised of a $170.0 million mortgage loan and a $30.0 million mezzanine loan. The facility has two one-year extension options. As of September 30, 2013, $44.2 million of the mortgage loan and $12.4 million of the mezzanine loan remained unfunded.


(10)	This loan has a committed amount of $75.0 million, which is recourse to us. Our partner has indemnified us for its pro rata share of the recourse guarantee. A portion of the guarantee terminates upon the joint venture reaching certain milestones. We believe it is unlikely that we will be required to perform under this guarantee.


(11)	In May 2013, this loan was refinanced and its maturity was extended to May 2018.


(12)	In April 2013, we acquired interests from our joint venture partner, CIF, and have consolidated the entity due to our controlling interest.

We act as the operating partner and day-to-day manager for all our unconsolidated joint ventures, except for 800 Third Avenue, 1 and 2 Jericho Plaza, 3 Columbus Circle, West Coast portfolio and The Meadows. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to our joint ventures. We earned approximately $3.5 million, $7.5 million, $2.5 million and $6.2 million from these services for the three and nine months ended September 30, 2013 and 2012, respectively. In addition, we have the ability to earn incentive fees based on the ultimate financial performance of certain of the joint venture properties.

The combined balance sheets for the unconsolidated joint ventures, at September 30, 2013 and December 31, 2012, are as follows (in thousands):



	September 30, 2013		December 31, 2012
Assets
Commercial real estate property, net	$	6,566,636	$	6,910,991
Other assets	937,469		728,113
Total assets	$	7,504,105	$	7,639,104

Liabilities and members’ equity
Mortgages and other loans payable	$	5,098,203	$	5,358,048
Other liabilities	378,752		406,929
Members’ equity	2,027,150		1,874,127
Total liabilities and members’ equity	$	7,504,105	$	7,639,104
Company’s net investment in unconsolidated joint ventures	$	1,109,815	$	1,032,243

The combined statements of income for the unconsolidated joint ventures for the three and nine months ended September 30, 2013 and 2012, respectively, are as follows (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013			2012
Total revenues	$	156,571		$	120,121	$	462,776		$	364,587
Operating expenses	29,211			17,984		86,027			50,957
Ground rent	657			657		1,972			2,317
Real estate taxes	19,105			12,008		53,368			37,865
Interest expense, net of interest income	56,169			55,058		169,137			160,528
Amortization of deferred financing costs	2,869			2,338		12,454			7,009
Depreciation and amortization	49,402			35,242		144,552			107,749
Transaction related costs	—			934		—			1,292
Total expenses	157,413			124,221		467,510			367,717
Gain on early extinguishment of debt	—			21,421		—			21,421
Net (loss) income	$	(842	)	$	17,321	$	(4,734	)	$	18,291
Company’s equity in net income of unconsolidated joint ventures	$	2,939		$	11,658	$	4,251		$	80,988

Equity in net income of unconsolidated joint ventures for the nine months ended September 30, 2012 includes $67.9 million of additional income recognized in June 2012 as a result of the distribution of refinancing proceeds from the recapitalization of 717 Fifth Avenue and $10.8 million of additional income recognized in August 2012 as a result of the repayment of the Meadows' previous mortgage at a discount.