Investments in Partially Owned Entities

3 Months Ended

Mar. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

6. Investments in Partially Owned Entities

Alexander’s, Inc. (“Alexander’s”) (NYSE: ALX)

As of March 31, 2017, we own 1,654,068 Alexander’s common shares, representing a 32.4% interest in Alexander’s. We account for our investment in Alexander’s under the equity method. We manage, lease and develop Alexander’s properties pursuant to agreements which expire in March of each year and are automatically renewable.

As of March 31, 2017, the market value (“fair value” pursuant to ASC Topic 820, Fair Value Measurements (“ASC 820”)) of our investment in Alexander’s, based on Alexander’s March 31, 2017 closing share price of $431.86, was $714,326,000, or $586,418,000 in excess of the carrying amount on our consolidated balance sheet. As of March 31, 2017, the carrying amount of our investment in Alexander’s, excluding amounts owed to us, exceeds our share of the equity in the net assets of Alexander’s by approximately $39,651,000. The majority of this basis difference resulted from the excess of our purchase price for the Alexander’s common stock acquired over the book value of Alexander’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of Alexander’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in Alexander’s net income. The basis difference related to the land will be recognized upon disposition of our investment.

Urban Edge Properties (“UE”) (NYSE: UE)

As of March 31, 2017, we own 5,717,184 UE operating partnership units, representing a 5.4% ownership interest in UE. We account for our investment in UE under the equity method and record our share of UE’s net income or loss on a one-quarter lag basis. In 2017 and 2016, we provided UE with information technology support. UE is providing us with leasing and property management services for (i) certain small retail properties that we plan to sell, and (ii) our affiliate, Alexander’s, Rego Park retail assets. As of March 31, 2017, the fair value of our investment in UE, based on UE’s March 31, 2017 closing share price of $26.30, was $150,362,000, or $126,004,000 in excess of the carrying amount on our consolidated balance sheet.

Pennsylvania Real Estate Investment Trust (“PREIT”) (NYSE: PEI)

As of March 31, 2017, we own 6,250,000 PREIT operating partnership units, representing an 8.0% interest in PREIT. We account for our investment in PREIT under the equity method and record our share of PREIT’s net income or loss on a one-quarter lag basis. As of March 31, 2017, the fair value of our investment in PREIT, based on PREIT’s March 31, 2017 closing share price of $15.14, was $94,625,000, or $25,018,000 below the carrying amount on our consolidated balance sheet. As of March 31, 2017, the carrying amount of our investment in PREIT exceeds our share of the equity in the net assets of PREIT by approximately $68,845,000. The majority of this basis difference resulted from the excess of the fair value of the PREIT operating units received over our share of the book value of PREIT’s net assets. Substantially all of this basis difference was allocated, based on our estimates of the fair values of PREIT’s assets and liabilities, to real estate (land and buildings). We are amortizing the basis difference related to the buildings into earnings as additional depreciation expense over their estimated useful lives. This depreciation is not material to our share of equity in PREIT’s net loss. The basis difference related to the land will be recognized upon disposition of our investment.

Below are schedules summarizing our investments in, and income (loss) from, partially owned entities.

(Amounts in thousands)		Percentage
		Ownership at		Balance as of
		March 31, 2017		March 31, 2017		December 31, 2016
Investments:
	Partially owned office buildings⁽¹⁾		Various	$	786,387	$	797,205
	Alexander’s		32.4%		127,908		129,324
	PREIT		8.0%		119,643		122,883
	India real estate ventures		4.1%-36.5%		31,519		30,290
	UE		5.4%		24,358		24,523
	Other investments⁽²⁾		Various		325,932		323,794
				$	1,415,747	$	1,428,019

	7 West 34th Street⁽³⁾		53.0%	$	(44,291)	$	(43,022)


(1)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others.
(2)	Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, 50-70 West 93rd Street, Toys "R" Us, Inc. (which has a carrying amount of zero) and others.
(3)	Our negative basis results from a deferred gain from the sale of a 47.0% ownership interest in the property and is included in "other liabilities" on our consolidated balance sheet.

(Amounts in thousands)				Percentage
				Ownership at		For the Three Months Ended March 31,
				March 31, 2017		2017		2016
Our Share of Net Income (Loss):
		Alexander's (see page ##PRS<ALXPAR> for details):
			Equity in net income		32.4%	$	6,892	$	6,937
			Management, leasing and development fees				1,509		1,725
							8,401		8,662
		UE (see page ##PRS<UEPAR> for details):
			Equity in net income		5.4%		1,091		876
			Management fees				209		209
							1,300		1,085

		Partially owned office buildings⁽¹⁾			Various		(10,054)		(14,249)

		India real estate ventures			4.1%-36.5%		1,654		(686)

		PREIT (see page ##PRS<PREITPAR> for details)			8.0%		(2,830)		(4,288)

		Other investments⁽²⁾			Various		2,974		5,236

						$	1,445	$	(4,240)


(1)	Includes interests in 280 Park Avenue, 650 Madison Avenue, One Park Avenue, 666 Fifth Avenue (Office), 7 West 34th Street, 330 Madison Avenue, 512 West 22nd Street, 85 Tenth Avenue and others.
(2)	Includes interests in Independence Plaza, Fashion Centre Mall/Washington Tower, 50-70 West 93rd Street, Toys "R" Us, Inc. and others.