Property Acquisitions (Tables)

9 Months Ended

Sep. 30, 2015

Summary of Unaudited Pro Forma Basis Results of Operations

The following table summarizes, on an unaudited pro forma basis, the results of operations of 11 Madison Avenue, which are included in the consolidated statements of operations, and our consolidated results of operations for the three and nine months ended September 30, 2015 and 2014 as though the acquisition of 11 Madison Avenue was completed on January 1, 2014. The supplemental pro forma data is not necessarily indicative of what the actual results of operations would have been assuming the transactions had been completed as set forth above, nor do they purport to represent our results of operations for future periods.



	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands, except per share amounts)	2015			2014		2015			2014
Actual revenues since acquisition	$	9,051				$	9,051
Actual net income since acquisition	(4,202		)			(4,202		)
Pro forma revenues	432,822			397,684		1,255,507			1,146,697
Pro forma income from continuing operations	25,299			31,197		26,645			350,125
Pro forma basic earnings per share	$	0.18		$	0.59	$	0.11		$	6.39
Pro forma diluted earnings per share	$	0.18		$	0.59	$	0.11		$	6.36
Pro forma basic earnings per unit	$	0.18		$	0.59	$	0.11		$	6.39
Pro forma diluted earnings per unit	$	0.18		$	0.59	$	0.11		$	6.36

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(1)

The pro forma income from continuing operations for the three and nine months ended September 30, 2015 and 2014 includes the effect of the incremental borrowings, including a $1.4 billion, 10-year, interest only, fixed rate mortgage financing carrying a per annum stated interest rate of 3.838% to complete the acquisition and the preliminary allocation of purchase price. In addition, the pro forma net income for the nine months ended September 30, 2014 was adjusted to include the sale of real estate assets for properties that have closed either subsequent to June 30, 2015 or we are currently under contract to sell, as if the sales were completed on January 1, 2014. The pro forma net income for the three and nine months ended September 30, 2015 excludes these sales.

Schedule of Fair Value of Equity Interest Immediately Before Acquisition Date

The acquisition-date fair value of the equity interest in 388-390 Greenwich Street immediately before the acquisition date as well as the purchase price fair value, as determined in accordance with the methodology set out in the prior sentence, is as follows (in thousands):



	388-390 Greenwich Street
Contract purchase price	$	1,585,000
Net consideration funded by us at closing, excluding consideration financed by debt	(208,614		)
Debt assumed	(1,162,379		)
Fair value of retained equity interest	214,007
Equity and/or debt investment held	(148,025		)
Other⁽¹⁾	5,464
Purchase price fair value adjustment	$	71,446

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(1)	Includes the acceleration of a deferred leasing commission from the joint venture to the Company.

2015 Acquisitions

Property Acquisitions

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following summarizes our preliminary allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of these acquisitions (in thousands):



	187 Broadway and 5 & 7 Dey Street ⁽¹⁾⁽²⁾		11 Madison Avenue ⁽¹⁾⁽³⁾		110 Greene Street ⁽¹⁾⁽⁴⁾		Upper East Side Residential⁽¹⁾⁽⁵⁾		1640 Flatbush Avenue⁽¹⁾
Acquisition Date	August 2015		August 2015		July 2015		June 2015		March 2015
Ownership Type	Fee Interest		Fee Interest		Fee Interest		Fee Interest		Fee Interest
Property Type	Residential/Retail		Office		Office		Residential/Retail		Retail

Purchase Price Allocation:
Land	$	22,101	$	849,926	$	89,250	$	17,500	$	6,120
Building and building leasehold	41,045		1,579,118		165,750		32,500		680
Above-market lease value	—		—		—		—		—
Acquired in-place leases	—		—		—		—		—
Other assets, net of other liabilities	—		—		—		—		—
Assets acquired	63,146		2,429,044		255,000		50,000		6,800
Mark-to-market assumed debt	—		—		—		—		—
Below-market lease value	—		—		—		—		—
Derivatives	—		—		—		—		—
Liabilities assumed	—		—		—		—		—
Purchase price	$	63,146	$	2,429,044	$	255,000	$	50,000	$	6,800
Net consideration funded by us at closing, excluding consideration financed by debt	$	63,146	$	2,429,044	$	255,000	$	50,000	$	6,800
Equity and/or debt investment held	$	—	$	—	$	—	$	—	$	—
Debt assumed	$	—	$	—	$	—	$	—	$	—

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(1)	We are currently in the process of analyzing the purchase price allocation and, as such, we have not allocated any value to intangible assets such as above- and below-market lease or in-place leases.


(2)	We acquired this property for consideration that included the issuance of $10.0 million and $26.9 million aggregate liquidation preferences of Series R and S Preferred Units, respectively, of limited partnership interest of the Operating Partnership and cash.


(3)	In August 2015, we acquired this property from a partnership of the Sapir Organization and CIM Group, with whom we have no other relationship.


(4)	We acquired a 90.0% controlling interest in this property for consideration that included the issuance of $5.0 million and $6.7 million aggregate liquidation preferences of Series P and Q Preferred Units, respectively, of limited partnership interest of the Operating Partnership and cash.


(5)	We, along with our joint venture partner, acquired this property for consideration that included the issuance of $13.8 million aggregate liquidation preference of Series N Preferred Units of limited partnership interest of the Operating Partnership and cash. We hold a 95.1% controlling interest in this joint venture.

2014 Acquisitions

Property Acquisitions

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

During the nine months ended September 30, 2015, we finalized the purchase price allocations based on third party appraisal and additional facts and circumstances that existed at the acquisition dates for the following 2014 acquisitions (in thousands):



	102 Greene Street⁽¹⁾		635 Madison Avenue⁽¹⁾		719 Seventh Avenue⁽¹⁾⁽²⁾		115 Spring Street⁽¹⁾		388-390 Greenwich Street⁽¹⁾⁽³⁾
Acquisition Date	October 2014		September 2014		July 2014		July 2014		May 2014
Ownership Type	Fee Interest		Fee Interest		Fee Interest		Fee Interest		Fee Interest
Property Type	Retail		Land		Development		Retail		Office

Purchase Price Allocation:
Land	$	8,215	$	205,632	$	41,850	$	11,078	$	516,292
Building and building leasehold	26,717		15,805		—		44,799		964,434
Above-market lease value	—		—		—		—		—
Acquired in-place leases	1,015		17,345		—		2,037		302,430
Other assets, net of other liabilities	3		—		—		—		6,495
Assets acquired	35,950		238,782		41,850		57,914		1,789,651
Mark-to-market assumed debt	—		—		—		—		—
Below-market lease value	3,701		85,036		—		4,789		186,782
Derivatives	—		—		—		—		18,001
Liabilities assumed	3,701		85,036		—		4,789		204,783
Purchase price	$	32,249	$	153,746	$	41,850	$	53,125	$	1,584,868
Net consideration funded by us at closing, excluding consideration financed by debt	$	32,249	$	153,746	$	41,850	$	53,125	$	208,614
Equity and/or debt investment held	$	—	$	—	$	—	$	—	$	148,025
Debt assumed	$	—	$	—	$	—	$	—	$	1,162,379

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(1)

Based on our preliminary analysis of the purchase price, we had allocated $11.3 million and $21.0 million to land and building, respectively, at 102 Greene Street, $153.7 million to land at 635 Madison Avenue, $14.4 million and $26.7 million to land and building, respectively, at 719 Seventh Avenue, $15.9 million and $37.2 million to land and building, respectively, at 115 Spring Street and $558.7 million and $1.0 billion to land and building, respectively, at 388-390 Greenwich. The impact to our consolidated statement of income for the nine months ended September 30, 2015 was $7.6 million in rental revenue for the amortization of aggregate below-market leases and $10.3 million of depreciation expense.

(2)

We, along with our joint venture partner, acquired this property for consideration that included the issuance of $14.1 million aggregate liquidation preference of Series L Preferred Units of limited partnership interest of the Operating Partnership and $9.5 million aggregate liquidation preference of Series K Preferred Units of limited partnership interest of the Operating Partnership. We hold a 75.0% controlling interest in this joint venture.

(3)

In May 2014, we acquired Ivanhoe Cambridge, Inc.'s 49.65% economic interest in this property, thereby consolidating full ownership of the property. The transaction valued the consolidated interests at $1.585 billion. Simultaneous with the closing, we refinanced the previous mortgage with a $1.45 billion mortgage. We also assumed the existing derivative instruments, which swapped $504.0 million of the mortgage to fixed rate (in October 2014, we entered into multiple swap agreements to hedge our interest rate exposure on an additional $500.0 million portion of this mortgage. See Note 8, "Mortgages and Other Loans Payable" for further details). We recognized a purchase price fair value adjustment of $71.4 million upon closing of this transaction. This property, which we initially acquired in December 2007, was previously accounted for as an investment in unconsolidated joint ventures.