Redeemable Noncontrolling Interests

9 Months Ended

Sep. 30, 2020

Redeemable Noncontrolling Partnership Units

Redeemable noncontrolling partnership units are primarily comprised of Class A Operating Partnership units held by third parties and are recorded at the greater of their carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in Vornado’s consolidated statements of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership.

Below is a table summarizing the activity of redeemable noncontrolling partnership units.


(Amounts in thousands)	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019
Beginning balance	$	624,804	$	862,062	$	888,915	$	783,562
Net income (loss)	3,884		22,637		(10,090)		197,354
Other comprehensive loss	(520)		(650)		(3,498)		(3,732)
Distributions	(7,332)		(8,852)		(25,330)		(25,788)
Redemption of Class A units for Vornado common shares, at redemption value	(3,586)		(1,999)		(6,050)		(8,128)
Redeemable Class A unit measurement adjustment	(23,557)		(24,228)		(272,436)		(123,635)
Other, net	5,776		5,363		27,958		34,700
Ending balance	$	599,469	$	854,333	$	599,469	$	854,333

As of September 30, 2020 and December 31, 2019, the aggregate redemption value of redeemable Class A units of the Operating Partnership, which are those units held by third parties, was $460,831,000 and $884,380,000, respectively, based on Vornado's quarter-end closing common share price.

Redeemable noncontrolling partnership units exclude our Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units, as they are accounted for as liabilities in accordance with ASC Topic 480, Distinguishing Liabilities and Equity, because of their possible settlement by issuing a variable number of Vornado common shares. Accordingly, the fair value of these units is included as a component of “other liabilities” on our consolidated balance sheets and aggregated $49,947,000 and $50,561,000 as of September 30, 2020 and December 31, 2019, respectively. Changes in the value from period to period, if any, are charged to “interest and debt expense” on our consolidated statements of income.

Redeemable Noncontrolling Interest in a Consolidated Subsidiary

The consolidated joint venture in which we own a 95% interest (the remaining 5% is owned by the Related Companies ("Related")) is developing Farley Office and Retail (the "Project"). During the second quarter of 2020, a historic tax credit investor (the "Tax Credit Investor") funded $92,400,000 of capital contributions. The Tax Credit Investor is projected to have $142,000,000 of net capital contributed after making an estimated $185,000,000 in total contributions and receiving an estimated $43,000,000 in distributions from the joint venture, which includes amounts paid upon the potential exercise of their put option, as discussed below.

The arrangement includes a put option whereby the joint venture may be obligated to purchase the Tax Credit Investor’s ownership interest in the Project at a future date. The put price is calculated based on a pre-determined formula. As exercise of the put option is outside of the joint venture’s control, the Tax Credit Investor’s interest, together with the put option, have been recorded to “redeemable noncontrolling interest in a consolidated subsidiary” on our consolidated balance sheet as of September 30, 2020. The redeemable noncontrolling interest is recorded at the greater of the carrying amount or redemption value at the end of each reporting period. Changes in the value from period to period are charged to “additional capital” in Vornado’s consolidated statements of changes in equity and to “partners’ capital” on the consolidated balance sheets of the Operating Partnership. There was no adjustment required for the three and nine months ended September 30, 2020.

Below is a table summarizing the activity of redeemable noncontrolling interest in a consolidated subsidiary.


(Amounts in thousands)	For the Three Months Ended September 30, 2020		For the Nine Months Ended September 30, 2020
Beginning balance	$	94,112	$	—
Net income	171		307
Contributions	—		92,400
Other, net	(1)		1,575
Ending balance	$	94,282	$	94,282