Investment in Unconsolidated Joint Ventures (Tables)

12 Months Ended

Dec. 31, 2013

Equity Method Investments and Joint Ventures [Abstract]

Schedule of general information on joint ventures

The table below provides general information on each of our joint ventures as of December 31, 2013 (amounts in thousands):



Property	Partner	Ownership Interest	Economic Interest	Square Feet	Acquisition Date	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
717 Fifth Avenue(3)	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(4)	SITQ	50.60%	50.60%	2,600	December 2007	1,575,000
180/182 Broadway(5)	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(6)	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(7)	Moinian	48.90%	48.90%	769	January 2011	500,000
280 Park Avenue(8)	Vornado	50.00%	49.50%	1,237	March 2011	400,000
1552-1560 Broadway(9)	Sutton	50.00%	50.00%	49	August 2011	136,550
747 Madison Avenue(10)	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(11)	Harel/Naftali	45.90%	45.90%	145	August 2012	31,000
West Coast office portfolio(12)	Blackstone	42.02%	43.74%	4,474	September 2012	880,103
521 Fifth Avenue(13)	Plaza	50.50%	50.50%	460	November 2012	315,000
21 East 66th Street(14)	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(15)	AG	40.00%	40.00%	365	January 2013	50,000
650 Fifth Avenue(16)	Sutton	50.00%	50.00%	32	November 2013	—

______________________________________________________________________


(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. In January 2014, our ground lease position was terminated.

(3)

In June 2012, this retail condominium was recapitalized. The recapitalization triggered a promote to our partner, which resulted in a reduction of our economic interest. In addition, we sold 50% of our remaining interest at a property valuation of $617.6 million. We recognized $67.9 million of additional cash income, equivalent to profit, due to the distribution of refinancing proceeds and a gain on sale of $3.0 million, which is net of a $1.0 million employee compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale.


(4)	The property is subject to a triple-net lease arrangement with a single tenant, which expires in 2020. In December 2013, the joint venture signed an agreement extending the lease through December 31, 2035. The agreement includes an option for the tenant to acquire the property for a specified price during the period from December 1, 2017 through December 31, 2020.


(5)	In June 2013, the joint venture completed its redevelopment project. In July 2013, the lease for Pace University, or Pace, its primary tenant, commenced.


(6)	The property is subject to a long-term net lease arrangement.


(7)	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. Because the joint venture has an option to repurchase the Y&R units, no gain was recognized on this sale.

(8)

In March 2011, we contributed our debt investment with a carrying value of $286.6 million to a newly formed joint venture in which we hold a 50% interest. We realized $38.7 million of additional income upon the contribution. This income is included in investment income in the consolidated statements of income. The joint venture paid us approximately $111.3 million and also assumed $30.0 million of related floating rate financing which matures in June 2016. In May 2011, this joint venture took control of the underlying property as part of a recapitalization transaction which valued the investment at approximately $1.1 billion.

(9)

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.


(10)	The joint venture owns 100% interest as tenant-in-common in 30 East 65th Street Corporation and the related proprietary lease of three cooperative apartment units in the building. In October 2013, the joint ventured acquired two additional cooperative apartment units in the building for $7.5 million.


(11)	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.

(12)

In September 2012, the Company, together with an affiliate of Blackstone, Gramercy and Square Mile Capital Management LLC, or Square Mile, formed a joint venture to recapitalize a 31-property, 4.5-million-square-foot West Coast office portfolio. The joint venture extended the $678.8 million mortgage secured by the portfolio for a term of 2 years with a 1-year extension option. In addition, the joint venture entered into a new $68.0 million mezzanine loan for a term of 2 years. 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 year ended December 31, 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.

(13)

In November 2012, we sold our 49.5% partnership interest in 521 Fifth Avenue to Plaza Global Real Estate Partners for a gross valuation price of $315.0 million for this property. We recognized a gain of $19.4 million on the sale which is net of a $1.0 million employee compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale. We also refinanced the existing $150.0 million loan with a $170.0 million 7-year mortgage loan which bears interest at 220 basis points over LIBOR. Following the sale, we deconsolidated the entity effective November 30, 2012 and have accounted our investment under the equity method because of lack of control. During the year ended December 31, 2013, we recognized additional post closing costs of $2.8 million as an adjustment to the gain.


(14)	We hold a 32.28% interest in 3 retail and 2 residential units at the property and a 16.14% in 4 residential units at the property.


(15)	The joint venture owned a preferred equity interest in an entity that holds the interest in a mixed commercial use property located in Manhattan. The preferred equity bore interest at a rate of 8.75% per annum through its redemption date in December 2013.

(16)

The joint venture owns a long-term leasehold interest in the retail space at 650 Fifth Avenue. In connection with the ground lease obligation, SLG provided a performance guaranty and Sutton executed a contribution agreement to reflect its pro rata obligation. In an event the property is converted into a condominium unit and the landlord elects the purchase option, the joint venture shall be obligated to acquire the unit at the then fair value. In November 2013, the joint venture signed an agreement to buy out the lease of retailer Juicy Couture for $51.0 million as part of its plan to redevelop and reposition the property. Under this agreement, the tenant shall terminate the lease no later than April 2014.

Schedule of first mortgage notes payable collateralized by the respective joint venture properties and assignment of leases

The first mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at December 31, 2013 and 2012, respectively, are as follows (amounts in thousands):



Property	Maturity Date	Interest Rate(1)		December 31, 2013		December 31, 2012
100 Park Avenue	September 2014	6.64	%	$	209,786	$	212,287
7 Renaissance	December 2015	10.00	%	1,276		856
11 West 34th Street	January 2016	4.82	%	17,205		17,491
280 Park Avenue	June 2016	6.57	%	706,886		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⁽³⁾	July 2022	4.45	%	300,000		300,000
21 East 66th Street⁽⁴⁾	April 2023	4.10	%	12,000		12,000
717 Fifth Avenue⁽³⁾	July 2024	9.00	%	304,000		294,509
1604-1610 Broadway⁽⁵⁾	—	5.66	%	27,000		27,000
Total fixed rate debt				$	3,223,895	$	3,219,885
West Coast office portfolio⁽⁶⁾	September 2014	3.93	%	526,290		745,025
747 Madison Avenue	October 2014	2.97	%	33,125		33,125
180/182 Broadway⁽⁷⁾	December 2014	2.94	%	89,893		71,524
The Meadows⁽⁸⁾	September 2015	7.75	%	67,350		57,000
3 Columbus Circle⁽⁹⁾	April 2016	2.38	%	239,233		247,253
1552 Broadway⁽¹⁰⁾	April 2016	3.48	%	158,690		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⁽¹¹⁾	August 2017	2.94	%	18,362		18,362
600 Lexington Avenue	October 2017	2.28	%	120,616		124,384
388 and 390 Greenwich Street⁽²⁾	December 2017	1.34	%	142,297		142,297
521 Fifth Avenue	November 2019	2.39	%	170,000		170,000
21 East 66th Street	June 2033	2.88	%	1,959		2,033
27-29 West 34th Street⁽¹²⁾				—		53,375
16 Court Street⁽¹³⁾				—		84,916
Total floating rate debt				$	1,842,815	$	2,138,163
Total joint venture mortgages and other loans payable				$	5,066,710	$	5,358,048

_________________________________


(1)	Effective weighted average interest rate for the year ended December 31, 2013, taking into account interest rate hedges in effect during the period.

(2)

These loans are 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 June 2012, the joint venture replaced the $245.0 million floating rate mortgage loan, which bore interest at 275 basis points over LIBOR and was due to mature in September 2012, with a $300.0 million fixed rate mortgage loan and $290.0 million mezzanine loan which is subject to accretion based on the difference between contractual interest rate and contractual pay rate.


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


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


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


(7)	This loan has a committed amount of $90.0 million. In November 2013, this loan was extended by one-year, subject to principal amortization through the maturity date.

(8)

As a result of the refinancing and restructuring in August 2012, we replaced the previous mortgage with a $60.0 million, three-year mortgage, of which $3.0 million was unfunded as of December 31, 2012, and recognized additional income of $10.8 million due to the repayment of the previous mortgage at a discount. In December 2013, the joint venture upsized the original mortgage with a maximum amount of $60.0 million to $67.4 million. All other terms of the loan remained the same.

(9)

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 7 of prior table.


(10)	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 December 31, 2013, $37.6 million of the mortgage loan and $3.7 million of the mezzanine loan remained unfunded.


(11)	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.


(12)	In May 2013, this loan was refinanced and its maturity was extended to May 2018. In December 2013, we sold our interest in the joint venture, inclusive of our share in the joint venture debt.


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

Schedule of combined balance sheets for the unconsolidated joint ventures

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



	December 31,
	2013		2012
Assets
Commercial real estate property, net	$	6,846,021	$	6,910,991
Other assets	827,282		728,113
Total assets	$	7,673,303	$	7,639,104
Liabilities and members' equity
Mortgages and other loans payable	$	5,066,710	$	5,358,048
Other liabilities	596,960		406,929
Members' equity	2,009,633		1,874,127
Total liabilities and members' equity	$	7,673,303	$	7,639,104
Company's investments in unconsolidated joint ventures	$	1,113,218	$	1,032,243

Schedule of combined statements of income for the unconsolidated joint ventures

The combined statements of income for the unconsolidated joint ventures, from acquisition date through the years ended December 31, 2013, 2012 and 2011 are as follows (in thousands):



	Years Ended December 31,
	2013		2012			2011
Total revenues	$	628,649	$	511,157		$	480,935
Operating expenses	114,633		80,722			71,830
Ground rent	2,863		2,975			3,683
Real estate taxes	71,755		53,613			51,511
Interest expense, net of interest income	225,765		221,476			210,489
Amortization of deferred financing costs	17,092		9,739			12,911
Transaction related costs	808		2,044			2,665
Depreciation and amortization	192,504		166,336			137,070
Total expenses	625,420		536,905			490,159
Gain on early extinguishment of debt	—		21,421			—
Net income (loss) before gain on sale	$	3,229	$	(4,327	)	$	(9,224	)
Company's equity in net income from unconsolidated joint ventures	$	9,921	$	76,418		$	1,583