Preferred Equity Investments

3 Months Ended

Mar. 31, 2018

5.	Preferred Equity Investments

We own a 24.4% interest in PGRESS Equity Holdings L.P., an entity that owns certain preferred equity investments that are consolidated into our consolidated financial statements.

The following is a summary of the preferred equity investments.

(Amounts in thousands, except square feet)	Paramount	Dividend	Initial		As of
Preferred Equity Investment	Ownership	Rate	Maturity		March 31, 2018			December 31, 2017
470 Vanderbilt Avenue ⁽¹⁾	24.4%	10.3%	Feb-2019		$	35,870		$	35,817
2 Herald Square⁽²⁾	24.4%	10.3%	Apr-2017	⁽²⁾		19,588			19,588
						55,458			55,405
Less: valuation allowance ⁽²⁾						(19,588	)		(19,588	)
Total preferred equity investments, net					$	35,870		$	35,817

⁽¹⁾

Represents a preferred equity investment in a partnership that owns 470 Vanderbilt Avenue, a 650,000 square foot office building in Brooklyn, New York. The preferred equity has a dividend rate of 10.3%, of which 8.0% was paid in cash through February 2016 and the unpaid portion accreted to the balance of the investment. Subsequent to February 2016, the entire 10.3% dividend is being paid in cash.

⁽²⁾

Represents a preferred equity investment and the related valuation allowance on the preferred equity investment in a partnership that owns 2 Herald Square, a 369,000 square foot office and retail property in Manhattan, that the borrower defaulted on.