Property Acquisitions

12 Months Ended

Dec. 31, 2012

Property Acquisitions

Property Acquisitions

3. Property Acquisitions

2012 Acquisitions

        In December 2012, we acquired a 68,000 square foot (unaudited) mixed use retail, office and residential building located at 131-137 Spring Street for $122.3 million. We are currently in the process of analyzing the fair value of the in-place leases; and consequently, no value has yet been assigned to the leases. Therefore, the purchase price allocation is preliminary and subject to change.

        In December 2012, we acquired the aggregate 42,000 square foot (unaudited) vacant retail buildings located at 985-987 Third Avenue for $18.0 million.

        In October 2012, we, along with Stonehenge Partners, acquired a 99-year leasehold position covering an 82,250 square foot, 96 unit residential building located at 1080 Amsterdam Avenue which we plan to redevelop into luxury residential units.

        In September 2012, we acquired the aggregate 267,000 square foot (unaudited) office buildings located at 635 and 641 Sixth Avenue for $173.0 million.

        In June 2012, we acquired a 215,000 square foot (unaudited) office building located at 304 Park Avenue South for $135.0 million. The property was acquired with approximately $102.0 million in cash and $33.0 million in units of limited partnership interest of the Operating Partnership.

        In October 2011, we formed a joint venture with Stonehenge Partners and, in January 2012, we acquired five retail and two multifamily properties in Manhattan for $193.1 million, inclusive of the issuance of $47.6 million aggregate liquidation preference of 4.5% Series G preferred units of limited partnership interest of the Operating Partnership. Simultaneous with the closing, we financed the multifamily component, which encompasses 385 units and 488,000 square feet (unaudited), with an aggregate 12-year $100.0 million fixed rate mortgage which bears interest at 4.125% and one of the retail properties financed with a 5-year $8.5 million fixed rate mortgage which bears interest at 3.75%. We hold an 80% interest in this joint venture which we consolidate as it is a VIE and we have been designated as the primary beneficiary.

        The following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of these 2012 acquisitions (amounts in thousands):

	635-641 Sixth Avenue		304 Park Avenue South		Stonehenge Properties
Land	$	69,848	$	54,189	$	65,533
Building and building leasehold		104,474		75,619		128,457
Above market lease value		—		2,824		594
Acquired in-place leases		7,727		8,265		9,573
Other assets, net of other liabilities		—		—		2,190
Assets acquired		182,049		140,897		206,347
Fair value adjustment to mortgage note payable		—		—		—
Below market lease value		9,049		5,897		13,239
Liabilities assumed		9,049		5,897		13,239
Purchase price allocation	$	173,000	$	135,000	$	193,108
Net consideration funded by us at closing	$	173,000	$	135,000	$	78,121
Equity and/or debt investment held	$	—	$	—	$	—
Debt assumed	$	—	$	—	$	—

2011 Acquisitions

        In November 2011, we acquired all of the interests in 51 East 42nd Street, a 142,000 square foot (unaudited) office building for approximately $80.0 million, inclusive of the issuance of $2.0 million, aggregate liquidation preference of 6.0% Series H preferred units of limited partnership interest of the Operating Partnership.

        In November 2011 we, along with The Moinian Group, formed a joint venture to recapitalize 180 Maiden Lane, a fully-leased, 1.1 million square foot (unaudited) Class A office tower. The consideration for our 49.9% stake in the joint venture included $41.0 million in cash and common units of limited partnership interest of the Operating Partnership valued at $31.7 million. The transaction valued the property at $442.3 million. In connection with the issuance of these Operating Partnership units, we recorded an $8.3 million fair value adjustment due to changes in our stock price. Simultaneous with the closing of the recapitalization, the joint venture refinanced the existing $344.2 million indebtedness with a five-year $280 million mortgage. We consolidate this joint venture, which is a VIE in which we have been designated as the primary beneficiary, due to the control we exert over leasing activities at the property.

        In May 2011, we acquired a substantial ownership interest in the 205,000 square foot (unaudited) office condominium at 110 East 42nd Street, along with control of the asset. We had previously provided a $16.0 million senior mezzanine loan as part of our sale of the condominium unit in 2007. The May 2011 transaction included a consensual modification of that loan. In conjunction with the transaction, we successfully restructured the in-place mortgage financing, which had previously been in default.

        In April 2011, we purchased SITQ Immobilier, a subsidiary of Caisse de depot et placement du Quebec, or SITQ's, 31.5% economic interest in 1515 Broadway, thereby consolidating full ownership of the 1,750,000 square foot (unaudited) building. The transaction valued the consolidated interests at $1.23 billion. This valuation was based on a negotiated sales agreement and took into consideration such factors as whether this was a distressed sale and whether a minority discount was warranted. We acquired the interest subject to the $458.8 million mortgage encumbering the property. We recognized a purchase price fair value adjustment of $475.1 million upon the closing of this transaction. This property, which we initially acquired in May 2002, was previously accounted for as an investment in unconsolidated joint ventures.

        In January 2011, we purchased City Investment Fund, or CIF's, 49.9% interest in 521 Fifth Avenue, thereby assuming full ownership of the 460,000 square-foot (unaudited) building. The transaction valued the consolidated interests at approximately $245.7 million, excluding $4.5 million of cash and other assets acquired. We acquired the interest subject to the $140.0 million mortgage encumbering the property. We recognized a purchase price fair value adjustment of $13.8 million upon the closing of this transaction. In April 2011, we refinanced the property with a new $150.0 million 2-year mortgage which carries a floating rate of interest of 200 basis points over the 30-day LIBOR. In connection with that refinancing, we acquired the fee interest in the property for $15.0 million.

        The following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of these 2011 acquisitions (amounts in thousands):

	51 East 42nd Street		180 Maiden Lane		110 East 42nd Street		1515 Broadway			521 Fifth Avenue
Land	$	44,095	$	191,523	$	34,000	$	462,700		$	110,100
Building		33,470		233,230		46,411		707,938			146,686
Above market lease value		5,616		7,944		823		18,298			3,318
Acquired in-place leases		4,333		29,948		5,396		98,661			23,016
Other assets, net of other liabilities		—		—		—		27,127			—
Assets acquired		87,514		462,645		86,630		1,314,724			283,120
Fair value adjustment to mortgage note payable		—		—		—		(3,693	)		—
Below market lease value		7,514		20,320		2,326		84,417			25,977
Liabilities assumed		7,514		20,320		2,326		80,724			25,977
Purchase price allocation	$	80,000	$	442,325	$	84,304	$	1,234,000		$	257,143
Net consideration funded by us at closing	$	81,632	$	81,835	$	2,744	$	259,228		$	70,000
Equity and/or debt investment held		—		—	$	16,000	$	40,942		$	41,432
Debt assumed	$	—	$	—	$	65,000	$	458,767		$	140,000

2010 Acquisitions

        In January 2010, we became the sole owner of 100 Church Street, a 1.05 million square-foot (unaudited) office tower located in downtown Manhattan, following the successful foreclosure of the senior mezzanine loan at the property. Our initial investment totaled $40.9 million, which was comprised of a 50% interest in the senior mezzanine loan and two other mezzanine loans at 100 Church Street, which we acquired from Gramercy Capital Corp. (NYSE: GKK), or Gramercy, in the summer of 2007. At closing of the foreclosure, we funded an additional $15.0 million of capital into the project as part of our agreement with Wachovia Bank, N.A. to extend and restructure the existing financing. Gramercy declined to fund its share of this capital and instead transferred its interests in the investment to us at closing. The restructured $139.7 million mortgage carries an interest rate of 350 basis points over the 30-day LIBOR. The restructured mortgage, which was scheduled to mature in January 2013, was repaid in March 2011.

        In August 2010, we acquired 125 Park Avenue, a Manhattan office tower, for $330 million. In connection with the acquisition, we assumed $146.25 million of in-place financing. The 5.748% interest-only loan matures in October 2014.

        In December 2010, we completed the acquisition of various investments from Gramercy. This acquisition included (1) the remaining 45% interest in the leased fee at 885 Third Avenue for approximately $39.3 million plus assumed mortgage debt of approximately $120.4 million, (2) the remaining 45% interest in the leased fee at 2 Herald Square for approximately $25.6 million plus assumed mortgage debt of approximately $86.1 million and, (3) the entire leased fee interest in 292 Madison Avenue for approximately $19.2 million plus assumed mortgage debt of approximately $59.1 million. These assets are all leased to third-party operators.

        In December 2010, we acquired two retail condominiums in Williamsburg, Brooklyn, for approximately $18.4 million. The retail condominiums are fully leased with rent commencement upon completion of the redevelopment work.

        The following summarizes our allocation of the purchase price of the assets acquired and liabilities assumed upon the closing of these 2010 acquisitions (amounts in thousands):

	100 Church Street		125 Park Avenue		Gramercy		Williamsburg
Land	$	32,494	$	120,900	$	501,021	$	6,200
Building		86,806		201,726		—		10,158
Above market lease value		118		11,282		23,178		2,304
Acquired in-place leases		17,380		28,828		217,312		—
Restricted cash		53,735		—		—		—
Assets acquired		190,533		362,736		741,511		18,662
Fair value adjustment to mortgage note payable		—		12,147		22,806		—
Below market lease value		8,025		20,589		—		277
Other liabilities, net of other assets		1,674		—		2,091		—
Liabilities assumed		9,699		32,736		24,897		277
Purchase price allocation	$	180,834	$	330,000	$	716,614	$	18,385
Net consideration funded by us at closing	$	15,000	$	183,750	$	86,864	$	18,385
Equity and/or debt investment held	$	40,938	$	—	$	111,751	$	—
Debt assumed	$	139,672	$	146,250	$	265,604	$	—