Investments in Unconsolidated Joint Ventures

We have investments in several real estate joint ventures with various partners. As of September 30, 2015 and December 31, 2014, 650 Fifth Avenue, 33 Beekman, and 3 Columbus Circle were VIEs in which we are not the primary beneficiary. Our net equity investment in these VIEs was $100.2 million and $146.2 million at September 30, 2015 and December 31, 2014, respectively. All other investments below are voting interest entities. 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, 2015:



Property	Partner	Ownership Interest	Economic Interest	Approximate Square Feet	Acquisition Date	Acquisition Price⁽¹⁾ (in thousands)
100 Park Avenue	Prudential Real Estate Investors	49.90%	49.90%	834,000	January 2000	$	95,800
717 Fifth Avenue	Jeff Sutton/Private Investor	10.92%	10.92%	119,500	September 2006	251,900
800 Third Avenue⁽²⁾	Private Investors	60.52%	60.52%	526,000	December 2006	285,000
1745 Broadway	Ivanhoe Cambridge, Inc.	56.88%	56.88%	674,000	April 2007	520,000
Jericho Plaza	Onyx Equities/Credit Suisse	20.26%	20.26%	640,000	April 2007	210,000
600 Lexington Avenue	Canadian Pension Plan Investment Board	55.00%	55.00%	303,515	May 2010	193,000
11 West 34th Street	Private Investor/ Jeff Sutton	30.00%	30.00%	17,150	December 2010	10,800
7 Renaissance	Louis Cappelli	50.00%	50.00%	65,641	December 2010	4,000
3 Columbus Circle⁽³⁾	The Moinian Group	48.90%	48.90%	741,500	January 2011	500,000
280 Park Avenue	Vornado Realty Trust	50.00%	50.00%	1,219,158	March 2011	400,000
1552-1560 Broadway⁽⁴⁾	Jeff Sutton	50.00%	50.00%	35,897	August 2011	136,550
724 Fifth Avenue	Jeff Sutton	50.00%	50.00%	65,040	January 2012	223,000
10 East 53rd Street	Canadian Pension Plan Investment Board	55.00%	55.00%	354,300	February 2012	252,500
33 Beekman⁽⁵⁾	Harel Insurance and Finance/TNG 33 LLC	45.90%	45.90%	163,500	August 2012	31,000
521 Fifth Avenue	Plaza Global Real Estate Partners LP	50.50%	50.50%	460,000	November 2012	315,000
21 East 66th Street⁽⁶⁾	Private Investors	32.28%	32.28%	16,736	December 2012	75,000
650 Fifth Avenue⁽⁷⁾	Jeff Sutton	50.00%	50.00%	32,324	November 2013	—
121 Greene Street	Jeff Sutton	50.00%	50.00%	7,131	September 2014	27,400
175-225 Third Street Brooklyn, New York	KCLW 3rd Street LLC/LIVWRK LLC	95.00%	95.00%	—	October 2014	74,600
55 West 46th Street	Prudential Real Estate Investors	25.00%	25.00%	347,000	November 2014	295,000
Stonehenge Portfolio⁽⁸⁾	Various	Various	Various	2,046,733	February 2015	36,668
131-137 Spring Street⁽⁹⁾	Invesco Real Estate	20.00%	20.00%	68,342	August 2015	277,750

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(1)	Acquisition price represents the actual or implied gross purchase price for the joint venture, which is not adjusted for subsequent acquisitions of additional interest.


(2)	In March 2015, we acquired an additional 17.56% interest in this joint venture for $67.5 million.


(3)	As a result of the sale of a condominium interest in September 2012, Young & Rubicam, Inc., or Y&R, owns floors three through eight at the property. Because the joint venture has an option to repurchase these floors, the gain associated with this sale was deferred.


(4)	The purchase price represents only the purchase of the 1552 Broadway interest which comprised approximately 13,045 square feet. 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.


(5)	The redevelopment project was substantially complete during the second quarter of 2015 and was conveyed to Pace University during the third quarter of 2015. In October 2015, we entered into an agreement to sell the property for $196.0 million. The transaction is expected to be completed in the first half of 2016, subject to customary closing conditions.


(6)	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.

(7)

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 our joint venture partner 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.

(8)

In February 2015, we acquired an interest in a portfolio of Manhattan residential and retail properties for $40.2 million, of which $3.5 million represented an increase in ownership interest in six of our existing consolidated joint venture properties. The $40.2 million of consideration included the issuance of $40.0 million aggregate liquidation preference of 3.75% Series M Preferred Units of limited partnership interest of the Operating Partnership. In July 2015, we acquired less than 1.0% of additional interest in the Stonehenge Portfolio for a net purchase price of $1.1 million.


(9)	In August 2015, we sold an 80% interest in 131-137 Spring Street. These properties, which were previously wholly-owned, were accounted for in the consolidated financial statements. See Note 4, "Properties Held for Sale and Property Dispositions."

Acquisition, Development and Construction Arrangements

Based on the characteristics of the following arrangements, which are similar to those of an investment, combined with the expected residual profit of not greater than 50%, we have accounted for these debt and preferred equity investments under the equity method. As of September 30, 2015 and December 31, 2014, the carrying value for acquisition, development and construction arrangements were as follows (in thousands):



Loan Type	September 30, 2015		December 31, 2014		Initial Maturity Date
Mezzanine loan and preferred equity	$	99,856	$	99,629	March 2016
Mezzanine loan⁽¹⁾	45,907		46,246		February 2022
	$	145,763	$	145,875

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(1)

We have an option to convert our loan to equity interest subject to certain conditions. In addition, we have determined that our option to convert the loan to equity is not a derivative financial instrument pursuant to Generally Accepted Accounting Principles, or 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 nine months ended September 30, 2015:



Property	Ownership Percentage	Disposition Date	Type of Sale	Gross Asset Valuation (in millions)⁽¹⁾		Gain (Loss) on Sale (in millions)⁽²⁾
The Meadows	50.00%	August 2015	Property	$	121.1	$	(1.6	)
315 West 36th Street	35.50%	September 2015	Ownership Interest	115.0		16.3

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(1)	Represents implied gross valuation of the property.


(2)	Represents our share of the gain or loss. The gain on sale for 315 West 36th Street is net of employee compensation awards accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on sale.

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 September 30, 2015 and December 31, 2014, respectively, are as follows (amounts in thousands):



Property	Maturity Date	Interest Rate⁽¹⁾		September 30, 2015		December 31, 2014
Fixed Rate Debt:
7 Renaissance	December 2015	10.00	%	$	2,927	$	2,147
11 West 34th Street	January 2016	4.82	%	16,671		16,905
280 Park Avenue	June 2016	6.57	%	694,846		700,171
1745 Broadway	January 2017	5.68	%	340,000		340,000
Jericho Plaza⁽²⁾	May 2017	5.65	%	163,750		163,750
800 Third Avenue	August 2017	6.00	%	20,910		20,910
521 Fifth Avenue	November 2019	3.73	%	170,000		170,000



Property	Maturity Date	Interest Rate⁽¹⁾		September 30, 2015		December 31, 2014
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	%	322,769		314,381
3 Columbus Circle⁽⁴⁾	March 2025	3.61	%	350,000		—
Stonehenge Portfolio⁽⁵⁾	Various	4.18	%	433,031		—
315 West 36th Street⁽⁶⁾				—		25,000
Total fixed rate debt				$	2,826,904	$	2,065,264

Floating Rate Debt:
1552 Broadway⁽⁷⁾	April 2016	4.32	%	188,409		184,210
Other loan payable	June 2016	1.09	%	30,000		30,000
650 Fifth Avenue⁽⁸⁾	October 2016	3.70	%	65,000		65,000
175-225 Third Street	December 2016	4.25	%	40,000		40,000
10 East 53rd Street	February 2017	2.70	%	125,000		125,000
724 Fifth Avenue	April 2017	2.62	%	275,000		275,000
33 Beekman⁽⁹⁾	August 2017	2.94	%	71,378		52,283
600 Lexington Avenue	October 2017	2.29	%	113,786		116,740
55 West 46th Street⁽¹⁰⁾	October 2017	2.50	%	150,000		150,000
Stonehenge Portfolio	December 2017	3.25	%	10,500		—
121 Greene Street	November 2019	1.70	%	15,000		15,000
131-137 Spring Street	August 2020	1.75	%	141,000		—
100 Park Avenue	February 2021	1.95	%	360,000		360,000
21 East 66th Street	June 2033	3.00	%	1,825		1,883
3 Columbus Circle⁽⁴⁾				—		230,974
The Meadows⁽¹¹⁾				—		67,350
Total floating rate debt				$	1,586,898	$	1,713,440
Total joint venture mortgages and other loans payable				$	4,413,802	$	3,778,704

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(1)	Effective weighted average interest rate for the three months ended September 30, 2015, taking into account interest rate hedges in effect during the period.


(2)	This loan is in default as of June 30, 2015 due to the non-payment of debt service.


(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 March 2015, the joint venture refinanced the previous mortgage and incurred a net loss on early extinguishment of debt of $0.8 million.


(5)	Amount is comprised of $13.4 million, $55.8 million, $35.0 million, $7.4 million, $142.1 million, and $179.4 million in fixed-rate mortgages that mature in July 2016, June 2017, November 2017, February 2018, August 2019, and June 2024, respectively.


(6)	In July 2015, the joint venture refinanced the previous mortgage. In September 2015, the interest in the property was sold for a gross asset valuation of $115.0 million.


(7)	These loans are comprised of a $150.0 million mortgage loan and a $41.5 million mezzanine loan. As of September 30, 2015, $1.7 million of the mortgage loan and $1.4 million of the mezzanine loan was unfunded.


(8)	This loan has a committed amount of $97.0 million, of which $32.0 million was unfunded as of September 30, 2015.


(9)	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.


(10)	This loan has a committed amount of $190.0 million, of which $40.0 million was unfunded as of September 30, 2015.


(11)	In August 2015, these properties were sold and the debt was repaid.

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, 21 East 66th Street, 175-225 Third Street and the Stonehenge Portfolio. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to certain of our joint ventures. We earned $1.9 million, $6.8 million, $3.8 million and $15.0 million from these services for the three and nine months ended September 30, 2015 and 2014, 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, 2015 and December 31, 2014, are as follows (in thousands):



	September 30, 2015		December 31, 2014
Assets
Commercial real estate property, net	$	6,282,267	$	5,275,632
Other assets	906,955		810,567
Total assets	$	7,189,222	$	6,086,199
Liabilities and members' equity
Mortgages and other loans payable	$	4,413,802	$	3,778,704
Other liabilities	501,637		485,572
Members' equity	2,273,783		1,821,923
Total liabilities and members' equity	$	7,189,222	$	6,086,199
Company's investments in unconsolidated joint ventures	$	1,239,008	$	1,172,020

The combined statements of income for the unconsolidated joint ventures, from acquisition date through the three and nine months ended September 30, 2015 and 2014 are as follows (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Total revenues	$	150,638		$	114,831	$	423,089		$	406,464
Operating expenses	27,647			18,530		79,478			63,575
Ground rent	4,677			2,638		9,841			7,295
Real estate taxes	23,494			15,867		65,205			48,209
Interest expense, net of interest income	51,430			40,885		147,152			137,949
Amortization of deferred financing costs	3,473			2,837		9,628			9,496
Transaction related costs	604			501		615			565
Depreciation and amortization	38,144			28,324		109,022			107,786
Total expenses	149,469			109,582		420,941			374,875
Loss on early extinguishment of debt	(248		)	—		(1,081		)	(6,743		)
Net income before gain on sale	$	921		$	5,249	$	1,067		$	24,846
Company's equity in net income from unconsolidated joint ventures	$	3,627		$	6,034	$	10,651		$	20,781