Investments in Unconsolidated Joint Ventures (Tables)

3 Months Ended

Mar. 31, 2013

Investments in Unconsolidated Joint Ventures

Schedule of general information on joint ventures

The table below provides general information on each of our joint ventures as of March 31, 2013 (amounts in thousands):

Property	Partner	OwnershipInterest		EconomicInterest		SquareFeet	Acquired	AcquisitionPrice($)(1)
100 Park Avenue	Prudential	49.90	%	49.90	%	834	02/00	95,800
21 West 34th Street	Sutton	50.00	%	50.00	%	30	07/05	22,400
1604-1610 Broadway(14)	Onyx	90.00	%	90.00	%	30	11/05	4,400
27-29 West 34th Street	Sutton	50.00	%	50.00	%	41	01/06	30,000
717 Fifth Avenue(2)	Sutton/Private Investor	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(3)	Onyx	50.00	%	50.00	%	582	09/07	111,500
388 and 390 Greenwich Street(4)	SITQ	50.60	%	50.60	%	2,600	12/07	1,575,000
180/182 Broadway(5)	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 34th Street	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(7)	Moinian	48.90	%	48.90	%	769	01/11	500,000
280 Park Avenue(8)	Vornado	50.00	%	50.00	%	1,237	03/11	400,000
1552-1560 Broadway(9)	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 53rd Street	CPPIB	55.00	%	55.00	%	390	02/12	252,500
33 Beekman(10)	Harel/Private Investor	45.90	%	45.90	%	145	08/12	31,000
West Coast office portfolio(11)	Blackstone/SquareMile	36.01	%	36.01	%	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 36th Street	Private Investors	35.50	%	35.50	%	148	12/12	45,000
Herald Center(6)	AG	40.00	%	40.00	%	365	01/13	50,000

(1) Acquisition price represents the actual or implied gross purchase price for the joint venture.

(2) 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. The refinancing replaced the $245.0 million floating rate mortgage loan, which bore interest at 275 basis points over LIBOR and was due to mature in September 2012, with a $300.0 million mortgage loan and $290.0 million mezzanine loan.

(3) 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.

(4) The property is subject to a 13-year triple-net lease arrangement with a single tenant.  The lease commenced in 2007.

(5) In August 2011, the joint venture sold the property located at 63 Nassau Street for $2.8 million.

(6) The joint venture acquired a preferred equity interest in an entity that holds interest in a retail property located in Manhattan. The preferred equity bears interest at a rate of 8.75% per annum and matures in June 2016.

(7) 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 March 31, 2013. 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.

(8) 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 $30.0 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.

(9) 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 46th Street for $8.4 million. In January 2013, we conveyed this property, which is adjacent to 1552 and 1560 Broadway, to the fee owner of 1560 Broadway.

(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, we, together with an affiliate of Blackstone, Gramercy Capital Corp., who in April 2013, changed its name to Gramercy Property Trust Inc. (NYSE: GPT), or 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 two years with a one-year extension option. In addition, the joint venture entered into a new $68.0 million mezzanine loan for a term of two years. See Note 5, “Debt and Preferred Equity Investments.” In February 2013, we acquired Gramercy’s 10.73% interest in the joint venture and simultaneously sold 20.78% of the newly acquired interest to Square Mile.

(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. We also refinanced the existing $150.0 million loan with a $170.0 million seven-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 two residential units and a 16.14% in four residential units.

(14) In March 2013, Sutton conveyed its interest to us.

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 March 31, 2013 and December 31, 2012, respectively, are as follows (amounts in thousands):

Property	Maturity Date	Interest Rate(1)		March 31, 2013		December 31, 2012
21 East 66th Street(11)	04/2013	5.63	%	$	12,000	$	12,000
100 Park Avenue	09/2014	6.64	%	211,673		212,287
7 Renaissance	02/2015	10.00	%	856		856
11 West 34th Street	01/2016	4.82	%	17,418		17,491
280 Park Avenue	06/2016	6.57	%	710,000		710,000
21 West 34th Street	12/2016	5.76	%	100,000		100,000
1745 Broadway	01/2017	5.68	%	340,000		340,000
1 and 2 Jericho Plaza	05/2017	5.65	%	163,750		163,750
800 Third Avenue	08/2017	6.00	%	20,910		20,910
388 and 390 Greenwich Street(2)	12/2017	3.20	%	996,082		996,082
315 West 36th Street	12/2017	3.04	%	25,000		25,000
717 Fifth Avenue	07/2022	4.45	%	300,000		300,000
717 Fifth Avenue	06/2024	9.00	%	296,803		294,509
1604-1610 Broadway(3)	—	5.66	%	27,000		27,000
Total fixed rate debt				$	3,221,492	$	3,219,885
27-29 West 34th Street(4)	05/2013	2.20	%	$	53,238	$	53,375
1552 Broadway(5)	08/2013	3.18	%	119,322		113,869
16 Court Street	10/2013	2.70	%	84,731		84,916
180/182 Broadway(6)	12/2013	2.96	%	76,862		71,524
West Coast office portfolio	09/2014	3.94	%	742,112		745,025
747 Madison Avenue	10/2014	3.00	%	33,125		33,125
The Meadows(7)	09/2015	7.75	%	57,000		57,000
3 Columbus Circle(8)	04/2016	2.41	%	245,275		247,253
Other loan payable	06/2016	1.10	%	30,000		30,000
724 Fifth Avenue	01/2017	2.56	%	120,000		120,000
10 East 53rd Street	02/2017	2.71	%	125,000		125,000
33 Beekman(9)	08/2017	2.96	%	18,362		18,362
600 Lexington Avenue	10/2017	2.31	%	123,454		124,384
388 and 390 Greenwich Street(2)	12/2017	1.36	%	142,297		142,297
521 Fifth Avenue(10)	11/2019	2.41	%	170,000		170,000
21 East 66th Street	06/2033	2.88	%	2,033		2,033
Total floating rate debt				$	2,142,811	$	2,138,163
Total mortgages and other loan payable				$	5,364,303	$	5,358,048

(1) Effective weighted average interest rate for the three months ended March 31, 2013, taking into account interest rate hedges in effect during the period.

(2) These loans 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.

(3) This loan went into default in November 2009 due to the non-payment of debt service.

(4) This loan was refinanced at maturity.

(5) This loan has a committed amount of $125.0 million. In April 2013, we refinanced the existing loan with a $200.0 million three-year loan comprised of a $170.0 million mortgage loan, which carries a floating rate of interest of 270 basis points over LIBOR, and a $30.0 mezzanine loan, which carries a floating rate of interest of 9.35% over LIBOR. The loan has two one-year extension options.

(6) This loan has a committed amount of $90.0 million.

(7) As a result of the refinancing and restructuring in August 2012, we replaced the existing loan with a $60.0 million, three-year mortgage and recognized additional income of $10.8 million due to the repayment of the previous mortgage at a discount. As of March 31, 2013, $3.0 million of the existing loan remained unfunded.

(8) In April 2011, our joint venture with The Moinian Group which owns the property located at 3 Columbus Circle, New York, obtained a $260.0 million five-year mortgage with the Bank of China, which carries a floating rate of interest of 210 basis points over the 30-day LIBOR. 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 7 of prior table.

(9) This loan has a committed amount of $75.0 million, which is recourse to us. Our partner has indemnified us for its pro rata share of the recourse guarantee. A portion of the guarantee terminates upon the joint venture reaching certain milestones. We believe it is unlikely that we will be required to perform under this guarantee.

(10) In connection with the sale of our 49.5% membership interest in the entity, the existing loan was refinanced with a $170.0 million seven-year mortgage. As we no longer control the entity, we deconsolidated the entity effective November 30, 2012. See Note 12 of prior table.

(11) In April 2013, this loan was refinanced and its maturity was extended to April 2023. The new loan bears interest at a fixed rate of 3.6% per annum.

Schedule of combined balance sheets for the unconsolidated joint ventures

The combined balance sheets for the unconsolidated joint ventures, at March 31, 2013 and December 31, 2012, are as follows (in thousands):

	March 31, 2013		December 31, 2012
Assets
Commercial real estate property, net	$	6,965,366	$	6,910,991
Other assets	789,684		728,113
Total assets	$	7,755,050	$	7,639,104
Liabilities and members’ equity
Mortgages and other loans payable	$	5,364,303	$	5,358,048
Other liabilities	405,820		406,929
Members’ equity	1,984,927		1,874,127
Total liabilities and members’ equity	$	7,755,050	$	7,639,104
Company’s net investment in unconsolidated joint ventures	$	1,073,130	$	1,032,243

Schedule of combined statements of income for the unconsolidated joint ventures

The combined statements of income for the unconsolidated joint ventures, from acquisition date through the three months ended March 31, 2013 and 2012 are as follows (in thousands):

	Three Months Ended
	March 31,
	2013		2012
Total revenues	$	151,231	$	120,048
Operating expenses	28,611		16,766
Ground rent	657		918
Real estate taxes	17,305		13,374
Interest, net of interest income	56,407		54,868
Depreciation and amortization	46,894		38,550
Transaction related costs	—		268
Total expenses	149,874		124,744
Net income (loss)	$	1,357	$	(4,696	)
Company’s equity in net income (loss) of unconsolidated joint ventures	$	5,073	$	(1,560	)