6. Investment in Unconsolidated Joint Ventures

We have investments in several real estate joint ventures with various partners, including CIF, SITQ, Canada Pension Plan Investment Board, or CPPIB, Prudential Real Estate Investors, or Prudential, Onyx Equities, or Onyx, The Witkoff Group, or Witkoff, Credit Suisse Securities (USA) LLC, or Credit Suisse, Jeff Sutton, or Sutton, Harel Insurance and Finance, or Harel, Louis Cappelli, or Cappelli, The Moinian Group, or Moinian, Vornado Realty Trust (NYSE: VNO), or Vornado, Blackstone, Gramercy Capital Corp. (NYSE: GKK), or Gramercy, Square Mile Capital Management LLC, or Square Mile, Plaza Global Real Estate Partners LP or Plaza, as well as private investors. All the investments below are voting interest entities, except for 33 Beekman, 3 Columbus Circle and 180/182 Broadway which are VIEs in which we are not the primary beneficiary. Our net equity investment in these three VIEs was $117.7 million and $161.9 million at December 31, 2012 and 2011, respectively. As we do not control the joint ventures listed below, we account for them under the equity method of accounting. We assess the accounting treatment for each joint venture on a stand-alone basis. This includes a review of each joint venture or LLC agreement to determine which party has what rights and whether those rights are protective or participating. In situations where we or our partner are involved in some or all of the following: approving the annual budget, receiving a detailed monthly reporting package from us, meeting with us on a quarterly basis to review the results of the joint venture, reviewing and approving the joint venture's tax return before filing, and approving all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights. Our joint venture agreements typically contain certain protective rights such as the requirement of partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan.

The table below provides general information on each of our joint ventures as of December 31, 2012 (amounts in thousands):

Property	Partner

100 Park Avenue	Prudential	49.90	%	49.90	%	834	02/00	95,800
21 West 34^th Street	Sutton	50.00	%	50.00	%	30	07/05	22,400
1604-1610 Broadway	Onyx/Sutton	45.00	%	63.00	%	30	11/05	4,400
27-29 West 34^th Street	Sutton	50.00	%	50.00	%	41	01/06	30,000
717 Fifth Avenue⁽⁹⁾	Sutton/Nakash	10.92	%	10.92	%	120	09/06	251,900
800 Third Avenue	Private Investors	42.95	%	42.95	%	526	12/06	285,000
1745 Broadway	Witkoff/SITQ/Lehman Bros.	32.26	%	32.26	%	674	04/07	520,000
1 and 2 Jericho Plaza	Onyx/Credit Suisse	20.26	%	20.26	%	640	04/07	210,000
16 Court Street	CIF	35.00	%	35.00	%	318	07/07	107,500
The Meadows⁽²⁾	Onyx	50.00	%	50.00	%	582	09/07	111,500
388 and 390 Greenwich Street⁽³⁾	SITQ	50.60	%	50.60	%	2,600	12/07	1,575,000
180/182 Broadway⁽⁴⁾	Harel/Sutton	25.50	%	25.50	%	71	02/08	43,600
600 Lexington Avenue	CPPIB	55.00	%	55.00	%	304	05/10	193,000
11 West 34^th Street⁽⁵⁾	Private Investor/Sutton	30.00	%	30.00	%	17	12/10	10,800
7 Renaissance	Cappelli	50.00	%	50.00	%	37	12/10	4,000
3 Columbus Circle⁽⁶⁾	Moinian	48.90	%	48.90	%	769	01/11	500,000
280 Park Avenue⁽⁷⁾	Vornado	50.00	%	50.00	%	1,237	03/11	400,000
1552-1560 Broadway⁽⁸⁾	Sutton	50.00	%	50.00	%	49	08/11	136,550
747 Madison Avenue	Harel/Sutton	33.33	%	33.33	%	10	09/11	66,250
724 Fifth Avenue	Sutton	50.00	%	50.00	%	65	01/12	223,000
10 East 53^rd Street	CPPIB	55.00	%	55.00	%	390	02/12	252,500
33 Beekman⁽¹⁰⁾	Harel/Naftali	45.90	%	45.90	%	145	08/12	31,000
West Coast office portfolio⁽¹¹⁾	Blackstone/SquareMile/ Gramercy	27.63	%	27.63	%	4,474	09/12	880,103
521 Fifth Avenue⁽¹²⁾	Plaza	50.50	%	50.50	%	460	11/12	315,000
21 East 66th Street⁽¹³⁾	Private Investors	32.28	%	32.28	%	17	12/12	75,000
315 West 36^th Street	Private Investors	35.50	%	35.50	%	148	12/12	45,000

⁽¹⁾: Acquisition price represents the actual or implied gross purchase price for the joint venture.
⁽²⁾: We, along with Onyx, acquired the remaining 50% interest on a pro-rata basis in September 2009. We recorded a $2.8 million depreciable real estate reserve in 2010 against this joint venture investment. In August 2012, Onyx made a capital contribution to the joint venture, which was distributed to us in full redemption of our preferred equity interest.
⁽³⁾: The property is subject to a 13-year triple-net lease arrangement with a single tenant. The lease commenced in 2007.
⁽⁴⁾: In December 2010, our 180-182 Broadway joint venture with Jeff Sutton announced an agreement with Pace University to convey a long-term ground lease condominium interest to Pace University for 20 floors of student housing. The joint venture also admitted Harel, which contributed $28.1 million to the joint venture, for a 49% partnership interest. In August 2011, the joint venture sold the property located at 63 Nassau Street for $2.8 million.
⁽⁵⁾: In December 2010, our $12.0 million first mortgage collateralized by 11 West 34^th Street was repaid at par, resulting in our recognition of additional income of approximately $1.1 million. Simultaneous with the repayment, the joint venture was recapitalized with the Company having a 30% interest. The property is subject to a long-term net lease arrangement.
⁽⁶⁾: We issued 306,296 operating partnership units in connection with this investment. We had an obligation to fund an additional $47.5 million to the joint venture, of which $46.8 million has been funded as of December 31, 2012. This liability is recorded in accrued interest payable and other liabilities. In addition, we made a $125.0 million bridge loan to this joint venture which bore interest at a rate of 7.5%. This loan was repaid when the joint venture refinanced its debt in April 2011. In September 2012, the joint venture sold to Young & Rubicam, Inc. a portion of the property, generally floors three through eight, through a condominium form of ownership, or Y&R units, for $143.6 million. As the joint venture has an option to repurchase the Y&R unit, no gain was recognized as a result of this transaction.
⁽⁷⁾: In March 2011, we contributed our debt investment with a carrying value of $286.6 million to a newly formed joint venture in which we hold a 50% interest. We realized $38.7 million of additional income upon the contribution. This income is included in preferred equity and investment income. The joint venture paid us approximately $111.3 million and also assumed $30 million of related floating rate financing which matures in June 2016. In May 2011, this joint venture took control of the underlying property as part of a recapitalization transaction which valued the investment at approximately $1.1 billion. We hold an effective 49.5% ownership interest in the joint venture.
⁽⁸⁾: In connection with this acquisition, the joint venture also acquired a long-term leasehold interest in the retail space and certain other spaces at 1560 Broadway, which is adjacent to 1552 Broadway. The purchase price relates only to the purchase of the 1552 Broadway interest which comprises 13,045 square feet. In May 2012, we, along with Sutton, acquired the property at 155 West 46^th Street for $8.4 million. This property is adjacent to 1552 and 1560 Broadway.
⁽⁹⁾: In June 2012, this retail condominium was recapitalized. The recapitalization triggered a promote which resulted in a reduction of our economic interest. In addition, we sold 50% of our remaining interest at a property valuation of $617.6 million. We recognized $67.9 million of additional cash income, equivalent to profit, due to the distribution of refinancing proceeds and a gain on sale of $3.0 million, which is net of a $1.0 million employee compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale.
⁽¹⁰⁾: The joint venture acquired the fee interest in the property and will develop an approximately 30 story building for student housing. Upon completion of the development, the joint venture will convey a long-term ground lease condominium interest in the building to Pace University.
⁽¹¹⁾: In September 2012, the Company, together with an affiliate of Blackstone, Gramercy and Square Mile, formed a joint venture to recapitalize a 31-property, 4.5-million-square-foot West Coast office portfolio. Following the recapitalization, Blackstone became the majority owner of the joint venture, with Equity Office Properties, a Blackstone affiliate, being responsible for the portfolio's management and leasing. Prior to the recapitalization, the Company held $26.7 million in mezzanine and preferred equity positions in the entity that owned the portfolio. The new joint venture extended the $678.8 million mortgage secured by the portfolio for a term of 2 years with a 1-year extension option. In addition, the joint venture entered into a new $68.0 million mezzanine loan for a term of 2 years. See Note 5, "Debt and Preferred Equity Investments."
⁽¹²⁾: In November 2012, we sold our 49.5% partnership interest in 521 Fifth Avenue to Plaza Global Real Estate Partners for a gross valuation price of $315.0 million for this property. We recognized a gain of $19.4 million on the sale which is net of a $1.0 million employee compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale. This gain is included in equity in net gain on sale of interest in unconsolidated joint venture / real estate on the consolidated statement of income. We also refinanced the existing $150.0 million loan with a $170.0 million 7-year mortgage loan which bears interest at 220 basis points over LIBOR. Following the sale, we deconsolidated the entity effective November 30, 2012 and accounted our investment under the equity method because of lack of control.
⁽¹³⁾: We hold a 32.28% interest in the three retail and 2 residential units and a 16.14% in four residential units.

In July 2012, we, along with our joint venture partner, sold One Court Square for $481.1 million, which included the assumption by the purchaser of $315.0 million of existing debt. We recognized a gain of $1.0 million on the sale of this property.

In April 2012, we, along with our joint venture partner, Jeff Sutton, sold the property located at 379 Broadway for $48.5 million, inclusive of the fee position which was acquired for $13.5 million. We recognized a gain on sale of this investment of $6.5 million.

In March 2012, we, along with our joint venture partner, Jeff Sutton, sold the property located at 141 Fifth Avenue for $46.0 million. We recognized a gain on sale of this investment of $7.3 million which is net of a $1.5 million employee compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale.

In November 2011, we acquired the remaining 50% interest in the joint venture which held an investment in a debt position on the property located at 450 West 33^rd Street. As we own 100% of this investment, we have reclassified it and recorded it as a debt investment. See Note 5, "Debt and Preferred Equity Investments."

In August 2011, we sold our 10% interest in the joint venture that held 1551-1555 Broadway for approximately $9.7 million. We recognized a gain of $4.0 million on the sale.

In May 2010, Green Hill Acquisition LLC, our wholly owned subsidiary, sold its 45% beneficial interest in the property located at 1221 Avenue of the Americas for total consideration of $577.4 million, of which approximately $95.9 million represented payment for existing reserves and the assumption of our pro-rata share of in-place financing. The sale generated proceeds to us of approximately $500.9 million. We recognized a gain of approximately $126.8 million on the sale of our interest, which is net of a $4.5 million employee compensation award, accrued in connection with the realization of this investment gain as a bonus to certain employees that were instrumental in realizing the gain on this sale.

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 December 31, 2012 and 2011, respectively, are as follows (amounts in thousands):

Property				December 31, 2012		December 31, 2011

717 Fifth Avenue⁽²⁾	06/2024	9.00	%	$	294,509	$	—
717 Fifth Avenue⁽²⁾	07/2022	4.45	%		300,000		—
388 and 390 Greenwich Street⁽³⁾	12/2017	3.20	%		996,082		1,106,757
315 West 36^th Street	12/2017	3.04	%		25,000		—
800 Third Avenue	08/2017	6.00	%		20,910		20,910
1 and 2 Jericho Plaza	05/2017	5.65	%		163,750		163,750
1745 Broadway	01/2017	5.68	%		340,000		340,000
21 West 34^th Street	12/2016	5.76	%		100,000		100,000
280 Park Avenue	06/2016	6.57	%		710,000		710,000
11 West 34^th Street	01/2016	4.82	%		17,491		17,761
7 Renaissance	02/2015	10.00	%		856		—
100 Park Avenue	09/2014	6.64	%		212,287		214,625
21 East 66^th Street	04/2013	5.63	%		12,000		—
1604-1610 Broadway⁽⁴⁾	—	5.66	%		27,000		27,000
One Court Square	—	—			—		315,000
141 Fifth Avenue	—	—			—		25,000

Total fixed rate debt				$	3,219,885	$	3,040,803

21 East 66^th Street	06/2033	2.88	%	$	2,033	$	—
521 Fifth Avenue⁽⁵⁾	11/2019	2.41	%		170,000		—
388 and 390 Greenwich Street⁽³⁾	12/2017	1.36	%		142,297		31,622
600 Lexington Avenue	10/2017	2.32	%		124,384		125,000
33 Beekman⁽⁶⁾	08/2017	2.96	%		18,362		—
10 East 53^rd Street	02/2017	2.71	%		125,000		—
724 Fifth Avenue	01/2017	2.56	%		120,000		—
Other loan payable	06/2016	1.11	%		30,000		30,000
3 Columbus Circle⁽⁷⁾	04/2016	2.45	%		247,253		254,896
The Meadows⁽⁸⁾	09/2015	7.75	%		57,000		84,698
747 Madison Avenue	10/2014	3.00	%		33,125		33,125
West Coast office portfolio	09/2014	3.96	%		745,025		—
180/182 Broadway⁽⁹⁾	12/2013	2.96	%		71,524		30,722
16 Court Street	10/2013	2.71	%		84,916		85,728
1552 Broadway⁽¹⁰⁾	08/2013	3.21	%		113,869		95,405
27-29 West 34^th Street⁽¹¹⁾	05/2013	2.21	%		53,375		53,900
717 Fifth Avenue⁽²⁾	—	—			—		245,000
379 West Broadway⁽¹²⁾	—	—			—		20,991

Total floating rate debt				$	2,138,163	$	1,091,087

Total mortgages and other loan payable				$	5,358,048	$	4,131,890

⁽¹⁾: Effective weighted average interest rate for the year ended December 31, 2012.
⁽²⁾: This loan was repaid in June 2012 and was replaced with a $300.0 million mortgage and a $290.0 million mezzanine loan. See Note 9 of the prior table.
⁽³⁾: Comprised of a $576.0 million mortgage and a $562.4 million mezzanine loan, both of which are fixed rate loans, except for $72.0 million of the mortgage and $70.3 million of the mezzanine loan which are floating. Up to $200.0 million of the mezzanine loan, secured indirectly by these properties, is recourse to us. We believe it is unlikely that we will be required to perform under this guarantee.
⁽⁴⁾: This loan went into default in November 2009 due to the non-payment of debt service. The joint venture is in discussions with the special servicer to resolve this default.
⁽⁵⁾: In connection with the sale of our 49.5% membership interest in the entity, the existing loan was refinanced with a $170.0 million 7-year mortgage. As we no longer controlled the entity, we deconsolidated the entity effective November 30, 2012. See Note 12 of prior table.
⁽⁶⁾: This loan has a committed amount of $75.0 million, which is recourse to us. Our partner has indemnified us for their pro rata share of the recourse guarantee. A portion of the guarantee burns off upon the joint venture reaching certain milestones.We believe it is unlikely that we will be required to perform under this guarantee.
⁽⁷⁾: We provided 50% of a bridge loan to this joint venture. In April 2011, our joint venture with The Moinian Group which owns the property located at 3 Columbus Circle, New York, refinanced the bridge loan and replaced it with a $260.0 million 5-year mortgage with the Bank of China, which carries a floating rate of interest of 210 basis points over the 30-day LIBOR, at which point SL Green and Deutsche Bank's bridge loan was repaid. The joint venture has the ability to increase the mortgage by $40.0 million based on meeting certain performance hurdles. In connection with this obligation, we executed a master lease agreement. Our partner has executed a contribution agreement to reflect its pro rata obligation under the master lease. In February 2012, the terms of the mortgage were modified to remove the Y&R condominium from the mortgage lien and from the existing master lease. See Note 6 of prior table.
⁽⁸⁾: As a result of the refinancing and restructuring in August 2012, we replaced the existing loan with a $60.0 million, 3-year mortgage, of which $3.0 million was unfunded as of December 31, 2012, and recognized additional income of $10.8 million due to the repayment of the previous mortgage at a discount.
⁽⁹⁾: This loan has a committed amount of $90.0 million.
⁽¹⁰⁾: This loan has a committed amount of $125.0 million.
⁽¹¹⁾: In April 2012, this loan was extended by 1-year.
⁽¹²⁾: This property was sold in April 2012 and the mortgage was repaid at a discount.

We act as the operating partner and day-to-day manager for all our joint ventures, except for 800 Third Avenue, 1 and 2 Jericho Plaza, 3 Columbus Circle and The Meadows. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to our joint ventures. We earned approximately $7.9 million, $8.6 million and $5.8 million from these services for the years ended December 31, 2012, 2011 and 2010, 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 December 31, 2012 and 2011, are as follows (amounts in thousands):

	2012		2011

*Assets*
Commercial real estate property, net	$	6,910,991	$	5,699,113
Other assets		728,113		599,596

Total assets	$	7,639,104	$	6,298,709

*Liabilities and members' equity*
Mortgages and other loans payable	$	5,358,048	$	4,131,890
Other liabilities		406,929		250,925
Members' equity		1,874,127		1,915,894

Total liabilities and members' equity	$	7,639,104	$	6,298,709

Company's net investment in unconsolidated joint ventures	$	1,032,243	$	893,933

The combined statements of income for the unconsolidated joint ventures, from acquisition date through three years ended December 31, 2012 are as follows (amounts in thousands):

	2012			2011			2010

Total revenues	$	511,157		$	480,935		$	593,159

Operating expenses		83,697			75,513			94,515
Real estate taxes		53,613			51,511			66,588
Transaction related costs		2,044			2,665			1,105
Interest		231,215			223,400			224,766
Depreciation and amortization		166,336			137,070			141,284

Total expenses		536,905			490,159			528,258

Gain on early extinguishment of debt		21,421			—			—

Net (loss) income before gain on sale	$	(4,327	)	$	(9,224	)	$	64,901

Company's equity in net income of unconsolidated joint ventures	$	76,418		$	1,583		$	39,607

The 2012 equity in net income of unconsolidated joint ventures includes $67.9 million of additional income due to the distribution of refinancing proceeds from the recapitalization of 717 Fifth Avenue.

Gramercy Capital Corp.

In April 2004, we formed Gramercy as a commercial real estate finance business. Gramercy qualified as a REIT for federal income tax purposes and expects to qualify for its current fiscal year.

At December 31, 2012, we held 0.7 million shares, or approximately 1.3% of Gramercy's common stock. Our total investment of approximately $2.2 million is based on the market value of our common stock investment in Gramercy at December 31, 2012. As we no longer have any significant influence over Gramercy, we account for our investment as available-for-sale securities. During 2012, we sold 2.5 million shares for net proceeds of $6.8 million and realized gains of $4.9 million. During 2011, we sold 2.1 million shares of Gramercy common stock and realized a gain of approximately $4.5 million on the sale. These gains were reclassified out of accumulated other comprehensive loss.

Effective May 2005, June 2009 and October 2009, Gramercy entered into lease agreements with an affiliate of ours, for their corporate offices at 420 Lexington Avenue, New York, New York. The first lease is for approximately 7,300 square feet and carries a term of ten years with rents of approximately $249,000 per annum for year one increasing to $315,000 per annum in year ten. The second lease is for approximately 900 square feet pursuant to a lease which ends in April 2015, with annual rent under this lease of approximately $35,300 per annum for year one increasing to $42,800 per annum in year six. The third lease is for approximately 1,400 square feet pursuant to a lease which ends in April 2015, with annual rent under this lease of approximately $67,300 per annum for year one increasing to $80,500 per annum in year six.

Effective June 2012, the first and third leases were amended and replaced with a new lease for approximately 8,100 square feet pursuant to a lease which ends in April 2015, with annual rent under this lease of approximately $345,000 for year one increasing to $357,000 in year three.

Marc Holliday, our chief executive officer, remains a board member of Gramercy.