Investments in Unconsolidated Joint Ventures

We have investments in several real estate joint ventures with various partners, including Ivanhoe Cambridge, Inc., formerly

SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, SITQ, Canada Pension Plan Investment Board, or CPPIB, Prudential Real Estate Investors, or Prudential, Onyx Equities, or Onyx, or Credit Suisse, Jeff Sutton, or Sutton, Harel Insurance and Finance, or Harel, TNG 33 LLC, or Naftali, Louis Cappelli, or Cappelli, The Moinian Group, or Moinian, Vornado Realty Trust (NYSE:VNO), or Vornado, Plaza Global Real Estate Partners LP, or Plaza, KCLW 3rd Street LLC, or Kushner Companies, LIVWRK LLC, or LIVWRK, as well as private investors. All the investments below are voting interest entities, except for 650 Fifth Avenue, 33 Beekman, and 3 Columbus Circle, which are VIEs in which we are not the primary beneficiary as of December 31, 2014 and 2013. Prior to the acquisition of our joint venture partner's interest in May 2014, 388-390 Greenwich Street was also a VIE. Prior to the sale of the property in September 2014, 180-182 Broadway was a VIE. Our net equity investment in these VIEs was $146.2 million and $310.7 million at December 31, 2014 and 2013, 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 December 31, 2014:



Property	Partner	Ownership Interest	Economic Interest	Approximate Square Feet (unaudited)	Acquisition Date	Acquisition Price⁽¹⁾ (in thousands)
100 Park Avenue	Prudential	49.90%	49.90%	834,000	January 2000	$	95,800
717 Fifth Avenue⁽²⁾	Sutton/Private Investor	10.92%	10.92%	119,500	September 2006	251,900
800 Third Avenue	Private Investors	42.95%	42.95%	526,000	December 2006	285,000
1745 Broadway⁽³⁾	Ivanhoe Cambridge	56.88%	56.88%	674,000	April 2007	520,000
Jericho Plaza	Onyx/Credit Suisse	20.26%	20.26%	640,000	April 2007	210,000
The Meadows	Onyx	50.00%	50.00%	582,100	September 2007	111,500
600 Lexington Avenue	CPPIB	55.00%	55.00%	303,515	May 2010	193,000
11 West 34th Street	Private Investor\Sutton	30.00%	30.00%	17,150	December 2010	10,800
7 Renaissance	Cappelli	50.00%	50.00%	65,641	December 2010	4,000
3 Columbus Circle⁽⁴⁾	Moinian	48.90%	48.90%	741,500	January 2011	500,000
280 Park Avenue⁽⁵⁾	Vornado	50.00%	50.00%	1,219,158	March 2011	400,000
1552-1560 Broadway⁽⁶⁾	Sutton	50.00%	50.00%	35,897	August 2011	136,550
724 Fifth Avenue	Sutton	50.00%	50.00%	65,040	January 2012	223,000
10 East 53rd Street	CPPIB	55.00%	55.00%	354,300	February 2012	252,500
33 Beekman⁽⁷⁾	Harel/Naftali	45.90%	45.90%	—	August 2012	31,000
521 Fifth Avenue⁽⁸⁾	Plaza	50.50%	50.50%	460,000	November 2012	315,000



21 East 66th Street⁽⁹⁾	Private Investors	32.28%	32.28%	16,736	December 2012	75,000
315 West 36th Street	Private Investors	35.50%	35.50%	147,619	December 2012	45,000
650 Fifth Avenue⁽¹⁰⁾	Sutton	50.00%	50.00%	32,324	November 2013	—
121 Greene Street	Sutton	50.00%	50.00%	7,131	September 2014	27,400
175-225 Third Street⁽¹¹⁾	Kushner Companies/LIVWRK	95.00%	95.00%	—	October 2014	74,600
55 West 46th Street⁽¹²⁾	Prudential	25.00%	25.00%	347,000	November 2014	295,000

____________________________________________________________________


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


(2)	In June 2012, 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, on the sale of 50.0% of our remaining interest.

(3)

In November 2014, we acquired Lehman Bros.' 7.37% interest in 1745 Broadway. In December 2014, we additionally acquired Witkoff's 14.79% interest and Wells Fargo's 2.46% interest in the property. In connection with the acquisition of Witkoff's interest, we assumed a partner loan of $16.0 million, which is included in mortgages and other loans payable in the consolidated balance sheet, and $7.0 million of accrued interest.


(4)	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, the gain associated with this sale was deferred.


(5)	In October 2014, we, along with Vornado, acquired equally the interest of minority shareholders for $11.0 million.


(6)	The purchase price represents only the purchase of the 1552 Broadway interest which comprised approximately 13,045 square feet (unaudited). The joint venture also owns a long-term leasehold interest in the retail space and certain other spaces at 1560 Broadway, which is adjacent to 1552 Broadway.


(7)	The property is currently being developed into a 30 story dormitory building, which will be conveyed to Pace University upon its completion under a long-term ground lease arrangement.

(8)

In November 2012, we refinanced the previous mortgage and sold 49.5% of our partnership interest. We recognized a gain of $19.4 million on the sale. Due to lack of control, we deconsolidated the entity effective November 30, 2012 and adopted the equity method of accounting thereafter. During the year ended December 31, 2013, we recognized additional post closing costs of $2.8 million as an adjustment to the gain.


(9)	In October 2014, the joint venture sold one of the residential units at the property. We recognized a gain of $0.7 million on the sale. As of December 31, 2014, we hold a 32.28% interest in three retail and two residential units at the property and a 16.14% interest in three residential units at the property.

(10)

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 the 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.


(11)	In October 2014, we, along with our joint venture partners, acquired a development site at 175-225 Third Street in Brooklyn, New York. The property is being managed by our joint venture partners. We did not consolidate the property as a result of multiple partners having substantive participating rights.

(12)

In October 2014, we acquired the vacant commercial condominium units on floors 2 and 22-34 in the building located at 55 West 46^th Street for $295.0 million. We also acquired a retail space on 46^th Street and the building’s parking garage and fitness center. We consolidated the property from acquisition through October 31, 2014. In November 2014, we, together with Prudential, formed a joint venture for the ownership of the condominium units. We sold 75.00% of our interest to Prudential and retained 25.00% interest in the joint venture. As a result of Prudential having substantive participating rights, we deconsolidated the property and adopted the equity method of accounting subsequently thereafter.

Acquisition, Development, and Construction Arrangements

In March 2014, we closed on the origination of a $100.0 million acquisition and equity participating financing consisting of a $60.0 million mezzanine loan and a $40.0 million preferred equity, which are both due to mature in March 2016, subject to three one-year extension options and a two-year option for the last extension. As of December 31, 2014, the carrying value of this investment was $99.6 million.

In October 2014, we closed on the origination of a $45.8 million acquisition and equity financing, which is due to mature in February 2022. We have an option to convert our loan into equity interest subject to certain conditions. As of December 31, 2014, the carrying value of this investment was $46.2 million.

Based on the characteristics of these arrangements which are similar to those of an investment, combined with the expected residual profit of not greater than 50%, we have accounted for our investment under the equity method. In addition, we determined that the option to purchase is not a derivative financial instrument pursuant to GAAP. As such, the embedded feature is not required to be bifurcated and the fair value accounting for the embedded feature at each reporting date is not applicable.

Sale of Joint Venture Interest or Property

The following table summarizes the investments in unconsolidated joint ventures sold during the years ended December 31, 2014, 2013, and 2012:



Property	Ownership Percentage		Disposition Date	Type of Sale	Implied Sales Price ⁽¹⁾ (in millions)		Gain on Sale⁽²⁾ (in millions)
180 Broadway⁽³⁾	25.50	%	September 2014	Property	$	222.5	$	16.5
747 Madison Avenue⁽⁴⁾	33.33	%	May 2014	Ownership Interest	160.0		—
West Coast Office portfolio⁽⁵⁾	42.02	%	March 2014	Ownership Interest	756.0		85.6
21-25 West 34th Street⁽⁶⁾	49.90	%	January 2014	Ownership Interest	114.9		20.9
27-29 West 34th Street⁽⁷⁾	50.00	%	December 2013	Ownership Interest	70.1		7.6
West Coast Office Portfolio⁽⁵⁾	42.04	%	Various dates in 2013	Property	224.3		2.1
One Court Square⁽⁸⁾	30.00	%	July 2012	Property	481.1		1.0
379 West Broadway⁽⁹⁾	45.00	%	April 2012	Property	48.5		6.5
141 Fifth Avenue⁽¹⁰⁾	50.00	%	March 2012	Property	46.0		7.3

____________________________________________________________________


(1)	Represents implied gross valuation for the joint venture or sales price of the property.


(2)	Represents the Company's share of the gain.


(3)	In connection with the sale of the property, we also recognized a promote of $3.3 million.

(4)

We sold our ownership interest in the joint venture, which owns 100% interest as tenant-in-common in 30 East 65th Street Corporation and the related proprietary lease of five cooperative apartment units in the property. We also recognized a promote of $10.3 million and originated a $30.0 million preferred equity investment. Given our continuing involvement as a preferred equity holder, we deferred the gain on sale of $13.1 million as we did not meet the requirements of a sale under the full accrual method. We, along with our joint venture partners, retained one apartment unit at this property.

(5)

Prior to the recapitalization, we consolidated the investment for the months of August and September 2012 as a result of our 63.18% ownership interest and control over its activities. Immediately following the recapitalization in September 2012, our investment was 27.63%. The change in ownership resulted in a change in accounting from consolidating the investment to accounting for the joint venture under the equity method of accounting. During the year ended December 31, 2013, the joint venture sold three properties, the proceeds of which were used primarily to repay a portion of the debt. Also during the year ended December 31, 2013, we acquired in aggregate 14.39% ownership interest of two of our joint venture partners. As a result, we had a 42.04% effective ownership interest (43.74% effective economic interest) in the West Coast portfolio as of December 31, 2013. During the year ended December 31, 2014, we sold our ownership interest in the joint venture.


(6)	We sold our ownership interest in the joint venture. We, along with our joint venture partner, retained approximately 91,300 square feet (unaudited) of development rights at the property.

(7)

We sold our ownership interest in the joint venture. The gain on the sale of this investment is net of a $1.5 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. Simultaneously, we, along with Sutton, also formed a new joint venture and retained the air rights at this property.


(8)	We, along with our joint venture partner, sold the property, which included the assumption by the purchaser of $315.0 million of existing debt.


(9)	We, along with our joint venture partner, sold the property, inclusive of the fee position, which was acquired for $13.5 million.


(10)	We, along with our joint venture partner, sold the property. The gain on the sale of this investment is net of a $1.5 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.

In December 2013, the preferred equity interest held by the joint venture which holds Herald Center was redeemed. This preferred equity interest bore interest at a rate of 8.75% per annum through the redemption date.

Mortgages and Other Loans Payable

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 December 31, 2014 and 2013, respectively, are as follows (amounts in thousands):



Property	Maturity Date	Interest Rate⁽¹⁾		December 31, 2014		December 31, 2013
Fixed Rate Debt:
7 Renaissance	December 2015	10.00	%	$	2,147	$	1,276
11 West 34th Street	January 2016	4.82	%	16,905		17,205
280 Park Avenue	June 2016	6.57	%	700,171		706,886
1745 Broadway	January 2017	5.68	%	340,000		340,000
Jericho Plaza	May 2017	5.65	%	163,750		163,750
800 Third Avenue	August 2017	6.00	%	20,910		20,910
315 West 36th Street	December 2017	3.16	%	25,000		25,000
521 Fifth Avenue⁽²⁾	November 2019	2.48	%	170,000		—
717 Fifth Avenue⁽³⁾	July 2022	4.45	%	300,000		300,000
21 East 66th Street	April 2023	3.60	%	12,000		12,000
717 Fifth Avenue⁽³⁾	July 2024	9.00	%	314,381		304,000
388-390 Greenwich Street⁽⁴⁾	—	—		—		996,082
100 Park Avenue⁽⁵⁾	—	—		—		209,786
21 West 34th Street⁽⁶⁾	—	—		—		100,000
1604-1610 Broadway⁽⁷⁾	—	—		—		27,000
Total fixed rate debt				$	2,065,264	$	3,223,895
Floating Rate Debt:
The Meadows	September 2015	7.75	%	67,350		67,350
3 Columbus Circle⁽⁸⁾	April 2016	2.33	%	230,974		239,233
1552 Broadway⁽⁹⁾	April 2016	4.25	%	184,210		158,690
Other loan payable	June 2016	1.05	%	30,000		30,000
650 Fifth Avenue⁽¹⁰⁾	October 2016	3.66	%	65,000		—
175-225 Third Street	December 2016	4.25	%	40,000		—
10 East 53rd Street	February 2017	2.65	%	125,000		125,000
724 Fifth Avenue⁽¹¹⁾	April 2017	2.57	%	275,000		120,000
33 Beekman⁽¹²⁾	August 2017	2.90	%	52,283		18,362
600 Lexington Avenue	October 2017	2.23	%	116,740		120,616
55 West 46th Street⁽¹³⁾	October 2017	2.45	%	150,000		—
121 Greene Street	November 2019	1.67	%	15,000		—
100 Park Avenue⁽⁵⁾	February 2021	2.36	%	360,000		—
21 East 66th Street	June 2033	2.88	%	1,883		1,959
521 Fifth Avenue⁽²⁾	—	—		—		170,000
388-390 Greenwich Street⁽⁴⁾	—	—		—		142,297
747 Madison Avenue	—	—		—		33,125
West Coast Office portfolio⁽¹⁴⁾	—	—		—		526,290
180/182 Broadway⁽¹⁵⁾	—	—		—		89,893
Total floating rate debt				$	1,713,440	$	1,842,815
Total joint venture mortgages and other loans payable				$	3,778,704	$	5,066,710

____________________________________________________________________


(1)	Effective weighted average interest rate for the year ended December 31, 2014, taking into account interest rate hedges in effect during the period.


(2)	This loan became a 3.73% fixed rate mortgage upon the effectivity of the interest rate swap in November 2014.


(3)	These loans are comprised of a $300.0 million fixed rate mortgage loan and $290.0 million mezzanine loan. The mezzanine loan is subject to accretion based on the difference between contractual interest rate and contractual pay rate.


(4)	In May 2014, we acquired the interest of our joint venture partner, thereby consolidating the entity. Simultaneous with the acquisition, we refinanced the mortgage and incurred a net loss on early extinguishment of debt of $2.4 million.


(5)	In February 2014, the joint venture refinanced the previous mortgage and incurred a net loss on early extinguishment of debt of $3.2 million.


(6)	In January 2014, we sold our interest in the joint venture, inclusive of our share of the joint venture debt.


(7)	This loan was in default since November 2009 due to the non-payment of debt service. In January 2014, the joint venture surrendered its ground lease position to the lender. During the year ended December 31, 2014, we recognized $7.7 million of incentive income, which is included in other income on the consolidated statements of income.

(8)

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 4 of the first table.


(9)	These loans are comprised of a $150.0 million mortgage loan and a $41.5 million mezzanine loan. As of December 31, 2014, $3.9 million of the mortgage loan and $3.4 million of the mezzanine loan remained unfunded.


(10)	In October 2014, the joint venture closed on a $97.0 million leasehold mortgage, of which $32.0 million remained unfunded as of December 31, 2014.


(11)	In April 2014, the joint venture refinanced the previous mortgage and incurred a net loss on early extinguishment of debt of $1.2 million.


(12)	This loan has a committed amount of $75.0 million, of which $18.4 million 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.


(13)	This loan has a committed amount of $190.0 million, of which $40.0 million remained unfunded as of December 31, 2014.


(14)	In March 2014, we sold our interest in the joint venture, inclusive of our share in the joint venture debt.


(15)	In September 2014, the joint venture sold the property and repaid the debt.

We act as the operating partner and day-to-day manager for all our joint ventures, except for 800 Third Avenue, Jericho Plaza, 280 Park Avenue, 3 Columbus Circle, The Meadows, 315 West 36th Street, 21 East 66th Street, and 175-225 Third Street. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to our joint ventures. We earned $16.9 million, $4.7 million and $7.9 million from these services for the years ended December 31, 2014, 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 December 31, 2014 and 2013, are as follows (in thousands):



	December 31,
	2014		2013
Assets
Commercial real estate property, net	$	5,275,632	$	6,846,021
Other assets	810,567		827,282
Total assets	$	6,086,199	$	7,673,303
Liabilities and members' equity
Mortgages and other loans payable	$	3,778,704	$	5,066,710
Other liabilities	485,572		596,960
Members' equity	1,821,923		2,009,633
Total liabilities and members' equity	$	6,086,199	$	7,673,303
Company's investments in unconsolidated joint ventures	$	1,172,020	$	1,113,218

The combined statements of income for the unconsolidated joint ventures, from acquisition date through the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):



	Years Ended December 31,
	2014			2013		2012
Total revenues	$	522,132		$	628,649	$	511,157
Operating expenses	82,436			114,633		80,722
Ground rent	9,898			2,863		2,975
Real estate taxes	64,217			71,755		53,613
Interest expense, net of interest income	178,743			225,765		221,476
Amortization of deferred financing costs	12,395			17,092		9,739
Transaction related costs	535			808		2,044
Depreciation and amortization	137,793			192,504		166,336
Total expenses	486,017			625,420		536,905
(Loss) gain on early extinguishment of debt	(6,743		)	—		21,421
Net income (loss) before gain on sale	$	29,372		$	3,229	$	(4,327	)
Company's equity in net income from unconsolidated joint ventures	$	26,537		$	9,921	$	76,418

Equity in net income from unconsolidated joint ventures for the year ended December 31, 2012 includes additional income of $67.9 million as a result of the distribution of the recapitalization of 717 Fifth Avenue and $10.8 million as a result of the repayment of the Meadows' previous mortgage at a discount.