Real Estate Fund Investments

12 Months Ended

Dec. 31, 2019

Real Estate Fund Investments [Abstract]

We are the general partner and investment manager of Vornado Capital Partners Real Estate Fund (the “Fund”) and own a 25.0% interest in the Fund, which had an initial eight-year term ending February 2019. On January 29, 2018, the Fund's term was extended to February 2023. The Fund's three-year investment period ended in July 2013. The Fund is accounted for under ASC 946, Financial Services – Investment Companies (“ASC 946”) and its investments are reported on its balance sheet at fair value, with changes in value each period recognized in earnings. We consolidate the accounts of the Fund into our consolidated financial statements, retaining the fair value basis of accounting.

We are also the general partner and investment manager of the Crowne Plaza Times Square Hotel Joint Venture (the “Crowne Plaza Joint Venture”) and own a 57.1% interest in the joint venture which owns the 24.7% interest in the Crowne Plaza Times Square Hotel not owned by the Fund. The Crowne Plaza Joint Venture is also accounted for under ASC 946 and we consolidate the accounts of the joint venture into our consolidated financial statements, retaining the fair value basis of accounting.

On November 6, 2019, the Fund completed a $145,075,000 refinancing of Lucida, a 155,000 square foot Manhattan retail and residential property. The three-year interest-only loan carries a rate of LIBOR plus 1.85% (3.54% as of December 31, 2019) with two one-year extension options. The loan replaces the previous $146,000,000 loan that bore interest at LIBOR plus 1.55% and was scheduled to mature in December 2019.

As of December 31, 2019, we had four real estate fund investments through the Fund and the Crowne Plaza Joint Venture with an aggregate fair value of $222,649,000, or $112,915,000 below cost, and had remaining unfunded commitments of $35,194,000, of which our share was $11,242,000. At December 31, 2018, the Fund had four real estate fund investments with an aggregate fair value of $318,758,000.

Below is a summary of (loss) income from the Fund and the Crowne Plaza Joint Venture for the years ended December 31, 2019, 2018 and 2017.



(Amounts in thousands)	For the Year Ended December 31,
	2019			2018				2017
Net investment income	$	2,027		$	6,105			$	18,507
Net unrealized loss on held investments	(106,109		)	(83,794		)		(25,807		)
Net realized (loss) gain on exited investments	—			(912		)		36,078
Previously recorded unrealized gain on exited investment	—			—				(25,538		)
New York City real property transfer tax (the "Transfer Tax")	—			(10,630		)	⁽¹⁾	—
(Loss) income from real estate fund investments	(104,082		)	(89,231		)		3,240
Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries	55,274			61,230				(14,044		)
Loss from real estate fund investments net of controlling interests in consolidated subsidiaries⁽²⁾	$	(48,808	)	$	(28,001	)		$	(10,804	)

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(1)

Due to the additional Transfer Tax related to the March 2011 acquisition of One Park Avenue which was recognized as a result of the New York City Tax Appeals Tribunal (the "Tax Tribunal") decision in the first quarter of 2018. We appealed the Tax Tribunal's decision to the New York State Supreme Court, Appellate Division, First Department ("Appellate Division"). Our appeal was heard on April 2, 2019. On April 25, 2019, the Appellate Division entered a unanimous decision and order that confirmed the decision of the Tax Tribunal and dismissed our appeal. On June 20, 2019, we filed a motion to reargue the Appellate Division's decision or for leave to appeal to the New York State Court of Appeals. That motion was denied on December 12, 2019 and can no longer be appealed.

(2)

2018 includes $4,252 of loss related to One Park Avenue additional transfer taxes and reduction in carried interest.