Investments in Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

5. Investments in Unconsolidated Joint Ventures

On March 29, 2024, the joint venture that owns 60 Wall Street, in which we have a 5.0% ownership interest, modified the existing $575,000,000 non-recourse mortgage loan and extended the maturity to May 2029. In connection with the modification, the loan was split into (i) a $316,250,000 A-Note that bears interest at Term Secured Overnight Financing Rate (“SOFR”) plus 245 basis points, of which 4.0% is current pay and the remaining is accrued, and (ii) a $258,750,000 B-Note that accrues interest at 12.0%. The joint venture is redeveloping the property and all amounts funded by the joint venture will be senior to the B-Note and all accrued interest.

On April 30, 2024, the joint venture that owns 111 Sutter Street, in which we have a 49.0% ownership interest, modified the existing $164,775,000 non-recourse mortgage loan to extend the maturity date to December 2025. The loan bears interest at a rate of SOFR plus 215 basis points and all interest shortfalls will continue to accrue to the principal balance of the loan.

In August 2024, the joint venture that owns Market Center, in which we have a 67.0% ownership interest, ceased making debt service payments on the non-recourse mortgage loan due to insufficient property cash flows. In January 2025, the joint venture defaulted on the $416,544,000 mortgage loan, as it was not repaid at maturity. The joint venture is currently working with the lenders to sell the property.

The following tables summarize our investments in unconsolidated joint ventures as of the dates thereof and the income or loss from these investments for the periods set forth below.

(Amounts in thousands)	Paramount	As of December 31,
Our Share of Investments:	Ownership	2024		2023
712 Fifth Avenue (1)	50.0%	$	-	$	-
Market Center (1)	67.0%		-		-
55 Second Street (1)	44.1%		-		30,322
111 Sutter Street (1)	49.0%		-		-
1600 Broadway (2)	9.2%		8,161		8,646
60 Wall Street (3)	5.0%		1,212		-
One Steuart Lane (2)	35.0% (4)		76,579		89,949
Oder-Center, Germany	9.5%		-		3,322
Investments in unconsolidated joint ventures		$	85,952	$	132,239

(Amounts in thousands)	For the Year Ended December 31,
Our Share of Net (Loss) Income:	2024				2023				2022
712 Fifth Avenue (1)	$	-			$	-			$	-
Market Center (1)		-				(161,514	)	(5)		(10,405	)
55 Second Street (1)		(30,221	)	(6)		(55,018	)	(6)		(2,943	)
111 Sutter Street (1)		-				-				(35,190	)	(7)
1600 Broadway (2)		1				-				(9	)
60 Wall Street (3)		(1,525	)			(25,001	)			(89	)
One Steuart Lane (2)		(11,577	)	(8)		(28,727	)	(8)		(4,696	)
Oder-Center, Germany		(4,037	)	(9)		(38	)			81
Loss from unconsolidated joint ventures	$	(47,359	)		$	(270,298	)		$	(53,251	)

(1)As of December 31, 2024, our basis in the joint ventures that own 712 Fifth Avenue, Market Center, 55 Second Street and 111 Sutter Street were negative. Since we have no further obligation to fund additional capital to these joint ventures, we have discontinued the equity method of accounting, and accordingly, we no longer recognize our proportionate share of earnings. Instead, we recognize income only to the extent we receive cash distributions from the joint ventures and recognize losses to the extent we make cash contributions to the joint ventures.

(2)As of December 31, 2024, the carrying amount of our investments in 1600 Broadway and One Steuart Lane was greater than our share of equity in these investments by $299 and $511, respectively, and primarily represents the unamortized portion of our capitalized acquisition costs.

(3)In the second quarter of 2023, the joint venture recognized a $455,893 real estate impairment loss. Accordingly, we recognized a $24,734 impairment loss on our investment in 60 Wall Street. This impairment, together with our share of operating losses recognized in that quarter, reduced our investment balance below zero as of June 30, 2023. As a result, in the second quarter of 2023, we discontinued the equity method of accounting. In the first quarter of 2024, the non-recourse mortgage loan was modified and the joint venture committed to fund the development costs related to the project. As a result, in the first quarter of 2024, we resumed the equity method of accounting and recognized all previously deferred losses.

(4)Represents RDF’s economic interest in One Steuart Lane, a for-sale residential condominium project. Our economic interest in One Steuart Lane (based on our 7.4% ownership interest in RDF) is 2.6%.

(5)In the fourth quarter of 2023, the joint venture that owns Market Center recognized a $341,872 real estate impairment loss, of which our 67.0% share was $229,054. Given that our share of the real estate impairment loss together with our share of operating and other losses recognized in the fourth quarter brought the basis of our investment in the joint venture below zero, in accordance with GAAP, we were limited to recognizing $148,906 of the real estate impairment loss during the year ended December 31, 2023.

(6)In the fourth quarter of 2023, the joint venture that owns 55 Second Street recognized a $119,279 real estate impairment loss, of which our share was $52,590. In the fourth quarter of 2024, the joint venture also recognized an additional $87,160 real estate impairment loss, of which our share was $38,429. Given that our share of the real estate impairment loss together with our share of operating and other losses recognized in the year brought the basis of our investment in the joint venture below zero, in accordance with GAAP, we were limited to recognizing $29,818 of the real estate impairment loss during the year ended December 31, 2024.

(7)In the fourth quarter of 2022, the joint venture that owns 111 Sutter Street recognized a $64,663 real estate impairment loss, of which our share was $31,685.

(8)In the third quarter of 2023, One Steuart Lane recognized $68,407 of impairment losses related to residential condominium units, of which RDF’s share was $23,942. In the fourth quarter of 2024, One Steuart Lane also recognized an additional $32,366 of impairment losses related to residential condominium units, of which RDF’s share was $11,328.

(9)In the fourth quarter of 2024, we recorded an impairment loss on our investment in Oder-Center, Germany of $3,915.

The following tables provide the combined summarized financial information of our unconsolidated joint ventures as of the dates thereof and for the periods set forth below.

(Amounts in thousands)	As of December 31,
Balance Sheets:	2024		2023
Real estate, net	$	1,567,771	$	1,528,595
Cash and cash equivalents and restricted cash		154,669		167,355
Intangible assets, net		42,672		52,164
For-sale residential condominium units (1)		195,113		246,824
Deferred rent receivable		42,128		35,448
Other assets		26,813		48,731
Total assets	$	2,029,166	$	2,079,117
Notes and mortgages payable, net	$	1,783,587	$	1,744,706
Accounts payable and accrued expenses		59,860		92,770
Intangible liabilities, net		2,480		5,026
Other liabilities		73,129		5,692
Total liabilities		1,919,056		1,848,194
Equity		110,110		230,923
Total liabilities and equity	$	2,029,166	$	2,079,117

(Amounts in thousands)	For the Year Ended December 31,
Income Statements:	2024				2023				2022
Revenues:
Rental revenue	$	138,390			$	155,549			$	194,031
Other income (2)		34,782				11,234				65,850
Total revenues		173,172				166,783				259,881
Expenses:
Operating (2)		138,121		(3)		169,826		(3)		152,313
Depreciation and amortization		46,522				67,727				85,949
Total expenses		184,643				237,553				238,262
Other income (expense):
Interest and other income, net		6,187				3,035				991
Interest and debt expense		(62,234	)			(73,485	)			(62,173	)
Gain on settlement of interest rate swap		2,498				-				-
Real estate impairment loss		(87,160	)	(4)		(917,044	)	(5)		(64,663	)	(6)
Loss before income taxes		(152,180	)			(1,058,264	)			(104,226	)
Income tax expense		(26	)			(32	)			(60	)
Net loss	$	(152,206	)		$	(1,058,296	)		$	(104,286	)

(1)Represents residential condominium units at One Steuart Lane that are available for sale.

(2)Includes proceeds and cost of sales from the sale of residential condominium units at One Steuart Lane.

(3)Includes impairment losses related to condominium units at One Steuart Lane of $32,366 and $68,407 in the years ended December 31, 2024 and 2023, respectively, of which RDF’s share was $11,328 and $23,942, respectively. See note 8 on page 84.

(4)Represents real estate impairment losses related to 55 Second Street of which our share was $29,818. See note 6 on page 84.

(5)Represents real estate impairment losses related to 60 Wall Street, Market Center and 55 Second Street of which our share was $24,734, $148,906 and $52,590, respectively. See notes 3, 5, and 6 on page 84.

(6)Represents a real estate impairment loss on 111 Sutter Street, of which our share was $31,685. See note 7 on page 84.