Property Acquisitions

2016 Acquisitions

During the year ended December 31, 2016, the property listed below was acquired from a third party. The following summarizes our final allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of this acquisition (in thousands):



	183 Broadway
Acquisition Date	March 2016
Ownership Type	Fee Interest
Property Type	Retail/Residential

Purchase Price Allocation:
Land	$	5,799
Building and building leasehold	23,431
Above-market lease value	—
Acquired in-place leases	773
Other assets, net of other liabilities	20
Assets acquired	30,023
Mark-to-market assumed debt	—
Below-market lease value	(1,523		)
Derivatives	—
Liabilities assumed	(1,523		)
Purchase price	$	28,500
Net consideration funded by us at closing, excluding consideration financed by debt	$	28,500
Equity and/or debt investment held	$	—
Debt assumed	$	—

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(1)

Based on our preliminary analysis of the purchase price, we had allocated $26.6 million and $1.9 million to land and building, respectively. We finalized the allocation in the fourth quarter of 2016. The impact to our consolidated statements of operations for the three months ended December 31, 2016 was an increase in rental revenue of $0.2 million for the amortization of aggregate below-market leases and an additional $2.1 million of depreciation expense.

2015 Acquisitions

During the year ended December 31, 2016, we finalized the purchase price allocations for the following 2015 acquisitions based on facts and circumstances that existed at the acquisition date for each property (in thousands):



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

Purchase Price Allocation:
Land	$	81,670		$	20,266		$	675,776		$	45,120		$	48,152	$	6,226
Building and building leasehold	182,447			42,468			1,553,602			215,470			—		501
Above-market lease value	3,320			17			19,764			—			—		—
Acquired in-place leases	22,449			3,621			366,949			8,967			1,922		146
Other assets, net of other liabilities	—			—			—			—			—		—
Assets acquired	289,886			66,372			2,616,091			269,557			50,074		6,873
Mark-to-market assumed debt	(55		)	—			—			—			—		—
Below-market lease value	(5,831		)	(3,226		)	(187,732		)	(14,557		)	—		(73		)
Derivatives	—			—			—			—			—		—
Liabilities assumed	(5,886		)	(3,226		)	(187,732		)	(14,557		)	—		(73		)
Purchase price	$	284,000		$	63,146		$	2,428,359		$	255,000		$	50,074	$	6,800
Net consideration funded by us at closing, excluding consideration financed by debt	$	79,085		$	—		$	—		$	—		$	—	$	—
Equity and/or debt investment held	$	54,575		$	—		$	—		$	—		$	—	$	—
Debt assumed	$	112,795		$	—		$	—		$	—		$	—	$	—

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(1)

Based on our preliminary analysis of the purchase price, we had allocated $97.0 million and $180.2 million to land and building, respectively, at 600 Lexington Avenue, $22.1 million and $41.0 million to land and building, respectively, at 187 Broadway and 5&7 Dey Street, $849.9 million and $1.6 billion to land and building, respectively, at 11 Madison Avenue, $89.3 million and $165.8 million to land and building, respectively, at 110 Greene Street, and $17.5 million and $32.5 million to land and building, respectively, at the Upper Eastside Residential Property and $6.1 million and $0.7 million to land and building, respectively, at 1640 Flatbush Avenue. The impact to our consolidated statements of operations for the twelve months ended December 31, 2015 was an increase in rental revenue of $7.8 million for the amortization of aggregate below-market leases and an additional $18.5 million of depreciation expense.

(2)

In December 2015, we acquired Canada Pension Plan Investment Board's 45% interest in this property, thereby consolidating full ownership of the property. The transaction valued the consolidated interests at $277.3 million. We recognized a purchase price fair value adjustment of $40.1 million upon closing of this transaction. This property, which we initially acquired in May 2010, was previously accounted for as an investment in unconsolidated joint ventures.


(3)	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.


(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

During the year ended December 31, 2014, the properties listed below were acquired from third parties. The following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of these 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 statements of operations for the twelve months ended December 31, 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.

For business combinations achieved in stages, the acquisition-date fair value of our equity interest in a property immediately before the acquisition date is determined based on estimated cash flow projections that utilize available market information and discount and capitalization rates that we deem appropriate. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The acquisition-date fair value of the equity interest in 600 Lexington Avenue and 388-390 Greenwich Street, which were acquired in 2015 and 2014, respectively, 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, are as follows (in thousands):



	600 Lexington Avenue			388-390 Greenwich Street
Contract purchase price	$	284,000		$	1,585,000
Net consideration funded by us at closing, excluding consideration financed by debt	(79,085		)	(208,614		)
Debt assumed	(112,795		)	(1,162,379		)
Fair value of retained equity interest	92,120			214,007
Equity and/or debt investment held	(54,575		)	(148,025		)
Other⁽¹⁾	2,533			5,464
Purchase price fair value adjustment	$	40,078		$	71,446

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

Pro Forma Unaudited

The following table summarizes, on an unaudited pro forma basis, the results of operations of 11 Madison Avenue, which are included in the consolidated results of operations for years ended December 31, 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.



	Year Ended December 31,
(in thousands, except per share/unit amounts)	2015		2014
Actual revenues since acquisition	$	29,865
Actual net income since acquisition	159
Pro forma revenues	1,657,937		1,540,525
Pro forma income from continuing operations ⁽¹⁾	102,440		376,710
Pro forma basic earnings per share	$	0.76	$	7.00
Pro forma diluted earnings per share	$	0.75	$	6.92
Pro forma basic earnings per unit	$	0.76	$	7.00
Pro forma diluted earnings per unit	$	0.75	$	6.92

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(1)

The pro forma income from continuing operations for the years ended December 31, 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 income from continuing operations for the year ended December 31, 2014 was adjusted to include the sale of real estate assets for properties that have closed either subsequent to December 31, 2015 or we are currently under contract to sell in connection with 11 Madison Avenue, as if the sales were completed on January 1, 2014. The pro forma income from continuing operations for the year ended December 31, 2015 excludes these sales.