Real Estate Fund Investments

6 Months Ended

Jun. 30, 2023

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. The Fund had an initial eight-year term ending February 2019, which has been extended to December 2023, by which time the Fund intends to dispose of its remaining investment and wind down its business. The Fund's three-year investment period ended in July 2013. The Fund is accounted for under ASC Topic 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 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, prior to the transaction described below, owned the 24.3% interest in the Crowne Plaza Times Square Hotel not owned by the Fund. Through our interests in the Fund and the Crowne Plaza Joint Venture, in total we owned an indirect, minority 32.8% interest in the Crowne Plaza Times Square Hotel. 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.

In June 2020, the Fund and the Crowne Plaza Joint Venture (collectively, the "Crowne Plaza Co-Investors") defaulted on the $274,355,000 non-recourse loan on the Crowne Plaza Times Square Hotel. In 2021, the mezzanine lender to the Crowne Plaza Co-Investors exercised its right under the loan documents and appointed an independent director to certain subsidiaries of the Crowne Plaza Co-Investors. Since then, neither we nor the Fund controlled Crowne Plaza Times Square Hotel nor have we or the Fund been involved in making any operating decisions relating to Crowne Plaza Times Square Hotel. In December 2022, the Fund entered into a Restructuring Support Agreement with certain of its subsidiaries and the lender of the loan on the Crowne Plaza Times Square Hotel, pursuant to which the independent director caused the subsidiaries to enter into a Chapter 11 bankruptcy restructuring process and the Fund agreed to work consensually with such subsidiaries and the lender to effectuate a transfer of ownership of the hotel property through a court supervised auction process, or an equitization of the secured loans held by the lender. On March 21, 2023, the bankruptcy court confirmed the subsidiaries' Chapter 11 plan of reorganization, which became effective on March 31, 2023. Following the Chapter 11 reorganization, neither we nor the Fund have any continuing ownership or other interest in the hotel property. As we have no carrying value or contingent liabilities related to Crowne Plaza, there is no impact to our consolidated financial statements for the three and six months ended June 30, 2023.

As of June 30, 2023, we had one real estate fund investment carried at zero on our consolidated balance sheet, $28,815,000 below cost, and had remaining unfunded commitments of $28,465,000, of which our share was $8,849,000.

Below is a summary of (loss) income from the Fund and the Crowne Plaza Joint Venture.


(Amounts in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net investment (loss) income	$	(102)	$	6,658	$	(121)	$	6,660
Previously recorded unrealized loss on exited investments	—		53,724		247,575		59,396
Realized loss on exited investments	—		(53,724)		(247,575)		(53,724)
Net unrealized loss on held investments	—		(6,800)		—		(6,800)
(Loss) income from real estate fund investments	(102)		(142)		(121)		5,532
Less loss (income) attributable to noncontrolling interests in consolidated subsidiaries	143		365		382		(3,599)
Income from real estate fund investments net of noncontrolling interests in consolidated subsidiaries	$	41	$	223	$	261	$	1,933

The table below summarizes the changes in the fair value of the Fund and the Crowne Plaza Joint Venture.


(Amounts in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Beginning balance	$	—	$	13,402	$	—	$	7,730
Previously recorded unrealized loss on exited investments	—		53,724		247,575		59,396
Realized loss on exited investments	—		(53,724)		(247,575)		(53,724)
Net unrealized loss on held investments	—		(6,800)		—		(6,800)
Dispositions	—		(5,672)		—		(5,672)

Ending balance	$	—	$	930	$	—	$	930