Investments in Unconsolidated Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2017

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 June 30, 2017:



Property	Partner	Ownership Interest⁽¹⁾	Economic Interest ⁽¹⁾	Unaudited Approximate Square Feet	Acquisition Date⁽²⁾	Acquisition Price⁽²⁾(in thousands)
100 Park Avenue	Prudential Real Estate Investors	49.90%	49.90%	834,000	February 2000	$	95,800
717 Fifth Avenue	Jeff Sutton/Private Investor	10.92%	10.92%	119,500	September 2006	251,900
800 Third Avenue	Private Investors	60.52%	60.52%	526,000	December 2006	285,000
1745 Broadway	Ivanhoe Cambridge, Inc.	56.87%	56.87%	674,000	April 2007	520,000
Jericho Plaza	Onyx Equities/Credit Suisse	11.67%	11.67%	640,000	April 2007	210,000
11 West 34th Street	Private Investor/ Jeff Sutton	30.00%	30.00%	17,150	December 2010	10,800
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%	57,718	August 2011	136,550
724 Fifth Avenue	Jeff Sutton	50.00%	50.00%	65,010	January 2012	223,000
10 East 53rd Street	Canadian Pension Plan Investment Board	55.00%	55.00%	354,300	February 2012	252,500
521 Fifth Avenue	Plaza Global Real Estate Partners LP	50.50%	50.50%	460,000	November 2012	315,000
21 East 66th Street⁽⁵⁾	Private Investors	32.28%	32.28%	13,069	December 2012	75,000
650 Fifth Avenue⁽⁶⁾	Jeff Sutton	50.00%	50.00%	69,214	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 ⁽⁷⁾	Various	Various	Various	1,439,016	February 2015	36,668
131-137 Spring Street	Invesco Real Estate	20.00%	20.00%	68,342	August 2015	277,750
605 West 42nd Street	The Moinian Group	20.00%	20.00%	927,358	April 2016	759,000
11 Madison Avenue	PGIM Real Estate	60.00%	60.00%	2,314,000	August 2016	2,605,000
333 East 22nd Street ⁽⁸⁾	Private Investors	33.33%	33.33%	26,926	August 2016	—
400 E 57th Street⁽⁹⁾	BlackRock, Inc and Stonehenge Partners	51.00%	41.00%	290,482	October 2016	170,000
One Vanderbilt ⁽¹⁰⁾	National Pension Service of Korea/Hines Interest LP	71.01%	71.01%	—	January 2017	3,310,000
102 Greene ⁽¹¹⁾	Private Investors	10.00%	10.00%	9,200	April 2017	43,500
Mezzanine Loan ⁽¹²⁾	Private Investors	33.33%	33.33%	—	May 2017	15,000


(1)	Ownership interest and economic interest represent the Company's interests in the joint venture as of June 30, 2017. Changes in ownership or economic interests, if any, within the current year are disclosed in the notes below.


(2)	Acquisition date and price represent the date on which the Company initially acquired an interest in the joint venture and the actual or implied gross purchase price for the joint venture on that date. Acquisition date and price are not adjusted for subsequent acquisitions or dispositions of interest.


(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)	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.

(6)

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.


(7)	In March 2017, the Company sold a partial interest in the Stonehenge Portfolio as further described under Sale of Joint Venture Interest or Properties below.


(8)	The joint venture acquired a leasehold interest in the property in October 2016.

(9)

In October 2016, the Company sold a 49% interest in this property to an investment account managed by BlackRock, Inc. The Company's interest in the property was sold within a consolidated joint venture owned 90% by the Company and 10% by Stonehenge. The transaction resulted in the deconsolidation of the venture's remaining 51% interest in the property. The Company's joint venture with Stonehenge remains consolidated resulting in the combined 51% interest being shown within investments in unconsolidated joint ventures on the Company's balance sheet.

(10)

In January 2017, the Company admitted two partners, National Pension Service of Korea and Hines Interest LP, into the One Vanderbilt Avenue development project. In April 2017, the criteria for deconsolidation were met, and the development is shown within investments in unconsolidated joint ventures. The partners have committed aggregate equity to the project totaling no less than $525 million and their ownership interest in the joint venture is based on their capital contributions, up to an aggregate maximum of 29.0%. At June 30, 2017 the total of the two partners' ownership interests based on equity contributed was 3.51%.


(11)	In April 2017, the Company sold a 90% interest in 102 Greene Street resulting in deconsolidation of the property.


(12)	In May 2017, the Company contributed a mezzanine loan secured by a commercial property in midtown Manhattan to a joint venture and retained a 33.33% interest in the venture. The carrying value is net of $10.0 million that was sold, which is included in other assets and other liabilities on the consolidated balance sheets as a result of the transfers not meeting the conditions for sale accounting.

The following table summarizes the investments in unconsolidated joint ventures sold during the six months ended June 30, 2017:

Property

Ownership Interest

Disposition Date

Type of Sale

Gross Asset Valuation

(in thousands)⁽¹⁾

Gain

on Sale

(in thousands)⁽²⁾

Stonehenge Portfolio (partial)

Various

March 2017

Ownership Interest

300,000

871


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


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

As of June 30, 2017 and December 31, 2016, the carrying value for acquisition, development and construction arrangements were as follows (in thousands):



Loan Type	June 30, 2017		December 31, 2016		Maturity Date
Mezzanine Loan and Preferred Equity⁽¹⁾	$	100,000	$	100,000	March 2018
Mezzanine Loan⁽²⁾	44,939		45,622		February 2022
Mezzanine Loan⁽³⁾	25,403		24,542		July 2036
	$	170,342	$	170,164


(1)	These loans were extended in February 2017.


(2)	We have an option to convert our loan to an equity interest subject to certain conditions. We have determined that our option to convert the loan to equity is not a derivative financial instrument pursuant to GAAP.


(3)	The Company has the ability to convert this loan into an equity position starting in 2021 and the borrower is able to force this conversion in 2024.

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 June 30, 2017 and December 31, 2016, respectively, are as follows (amounts in thousands):

Property

Economic
Interest ⁽¹⁾

Maturity Date

Interest

Rate ⁽²⁾

June 30, 2017

December 31, 2016

Fixed Rate Debt:



Property	Economic Interest ⁽¹⁾		Maturity Date	Interest Rate ⁽²⁾		June 30, 2017			December 31, 2016
521 Fifth Avenue	50.50	%	November 2019	3.73	%	$	170,000		$	170,000
717 Fifth Avenue ⁽³⁾	10.92	%	July 2022	4.45	%	300,000			300,000
717 Fifth Avenue ⁽³⁾	10.92	%	July 2022	5.50	%	355,328			355,328
21 East 66th Street	32.28	%	April 2023	3.60	%	12,000			12,000
3 Columbus Circle	48.90	%	March 2025	3.61	%	350,000			350,000
11 Madison Avenue	60.00	%	September 2025	3.84	%	1,400,000			1,400,000
800 Third Avenue	60.52	%	February 2026	3.37	%	177,000			177,000
400 East 57th Street	41.00	%	November 2026	3.00	%	100,000			100,000
Stonehenge Portfolio ⁽⁴⁾	Various		Various	4.17	%	360,889			362,518
1745 Broadway ⁽⁵⁾	56.87	%				—			340,000
Total fixed rate debt						$	3,225,217		$	3,566,846
Floating Rate Debt:
55 West 46th Street ⁽⁶⁾	25.00	%	October 2017	3.31	%	$	160,727		$	157,322
175-225 Third Street	95.00	%	December 2017	5.04	%	40,000			40,000
Jericho Plaza ⁽⁷⁾	11.67	%	March 2018	5.16	%	78,454			76,993
724 Fifth Avenue	50.00	%	April 2018	3.43	%	275,000			275,000
1552 Broadway ⁽⁸⁾	50.00	%	April 2018	5.19	%	185,410			185,410
605 West 42nd Street	20.00	%	July 2018	3.11	%	539,000			539,000
650 Fifth Avenue ⁽⁹⁾	50.00	%	August 2018	4.76	%	86,500			77,500
280 Park Avenue	50.00	%	June 2019	3.01	%	900,000			900,000
121 Greene Street	50.00	%	November 2019	2.50	%	15,000			15,000
1745 Broadway ⁽¹⁰⁾	56.87	%	January 2020	2.85	%	345,000			—
10 East 53rd Street	55.00	%	February 2020	3.26	%	170,000			125,000
131-137 Spring Street	20.00	%	August 2020	2.56	%	141,000			141,000
11 West 34th Street	30.00	%	January 2021	2.46	%	23,000			23,000
100 Park Avenue	49.90	%	February 2021	2.76	%	360,000			360,000
One Vanderbilt ⁽¹¹⁾	71.01	%	September 2021	4.52	%	209,444			—
21 East 66th Street	32.28	%	June 2033	3.21	%	1,686			1,726
Stonehenge Portfolio	Various		April 2018	2.28	%	55,340			65,577
Total floating rate debt						$	3,585,561		$	2,982,528
Total joint venture mortgages and other loans payable						$	6,810,778		$	6,549,374
Deferred financing costs, net						(121,291		)	(95,408		)
Total joint venture mortgages and other loans payable, net						$	6,689,487		$	6,453,966


(1)	Economic interest represent the Company's interests in the joint venture as of June 30, 2017. Changes in ownership or economic interests, if any, within the current year are disclosed in the notes to the investment in unconsolidated joint ventures note above.


(2)	Effective weighted average interest rate for the three months ended June 30, 2017, taking into account interest rate hedges in effect during the period.


(3)	These loans are comprised of a $300.0 million fixed rate mortgage loan and $355.3 million mezzanine loan. The mezzanine loan is subject to accretion based on the difference between contractual interest rate and contractual pay rate.


(4)	Amount is comprised of $34.2 million, $138.3 million, $173.4 million, and $15.0 million in fixed-rate mortgages that mature in November 2017, August 2019, June 2024, and February 2027, respectively.


(5)	In January 2017, this loan was refinanced with a floating rate loan as shown above.


(6)	This loan has a committed amount of $190.0 million, of which $29.3 million was unfunded as of June 30, 2017.


(7)	The property secures a two year $100.0 million loan, of which $78.5 million is currently outstanding.


(8)	These loans are comprised of a $145.0 million mortgage loan and a $41.5 million mezzanine loan. As of June 30, 2017, $0.6 million of the mortgage loan and $0.5 million of the mezzanine loan were unfunded.


(9)	This loan has a committed amount of $97.0 million, of which $10.5 million was unfunded as of June 30, 2017.


(10)	This loan has a committed amount of $375.0 million, of which $30.0 million was unfunded as of June 30, 2017.

(11)

This loan is a $1.5 billion construction facility in connection with the development of One Vanderbilt. This facility bears interest at 350 basis points over 30-day LIBOR, with reduction based on meeting certain conditions, and has an initial five-year term with two one-year extension options. Advances under the loan are subject to incurred costs, funded equity, loan to value thresholds, and entering into construction contracts.

Schedule of combined balance sheets for the unconsolidated joint ventures

The combined balance sheets for the unconsolidated joint ventures, at June 30, 2017 and December 31, 2016 are as follows (in thousands):



	June 30, 2017		December 31, 2016
Assets
Commercial real estate property, net	$	9,868,906	$	9,131,717
Cash and restricted cash	316,941		328,455
Tenant and other receivables, related party receivables, and deferred rents receivable, net of allowance	261,222		232,778
Debt and preferred equity investments, net	201,299		336,164
Other assets	631,543		683,481
Total assets	$	11,279,911	$	10,712,595
Liabilities and members' equity
Mortgages and other loans payable, net	$	6,689,487	$	6,453,966
Deferred revenue/gain	340,253		356,414
Other liabilities	395,662		391,500
Members' equity	3,854,509		3,510,715
Total liabilities and members' equity	$	11,279,911	$	10,712,595
Company's investments in unconsolidated joint ventures	$	2,219,371	$	1,890,186

Schedule of combined statements of income for the unconsolidated joint ventures

The combined statements of operations for the unconsolidated joint ventures, for the three and six months ended June 30, 2017 and 2016, are as follows (in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017		2016
Total revenues	$	210,590		$	151,575	$	427,109	$	314,087
Operating expenses	39,147			27,166		77,941		54,420
Ground rent	4,179			3,715		8,430		6,926
Real estate taxes	35,170			24,332		70,109		48,542
Interest expense, net of interest income	59,702			46,351		115,030		96,087
Amortization of deferred financing costs	7,458			7,276		13,963		10,512
Transaction related costs	56			—		146		—
Depreciation and amortization	65,944			37,294		137,109		75,145
Total expenses	211,656			146,134		422,728		291,632
Loss on early extinguishment of debt	—			—		—		(1,606		)
Net (loss) income before gain on sale	$	(1,066	)	$	5,441	$	4,381	$	20,849
Company's equity in net income from unconsolidated joint ventures	$	3,412		$	5,841	$	10,026	$	15,937