Investments in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures We have investments in several real estate joint ventures with various partners. As of December 31, 2019 , the book value of these investments was 2.9 billion , net of investments with negative book values totaling $80.9 million for which we have an implicit commitment to fund future capital needs. As of December 31, 2019 , 800 Third Avenue, 21 East 66th Street, 605 West 42nd Street, 333 East 22nd Street, and certain properties within the Stonehenge Portfolio are VIEs in which we are not the primary beneficiary. As of December 31, 2018 , 800 Third Avenue, 21 East 66th Street, 605 West 42nd Street, 333 East 22nd Street, One Vanderbilt, and certain properties within the Stonehenge Portfolio are VIEs in which we are not the primary beneficiary. Our net equity investment in these VIEs was $145.9 million as of December 31, 2019 and $808.3 million as of December 31, 2018 . Our maximum loss is limited to the amount of our equity investment in these VIEs. See the "Principles of Consolidation" section of Note 2, "Significant Accounting Policies". All other investments below are voting interest entities. As we do not control the joint ventures listed below, we account for them under the equity method of accounting. The table below provides general information on each of our joint ventures as of December 31, 2019 : Property Partner Ownership Interest (1) Economic Interest (1) Unaudited Approximate Square Feet 100 Park Avenue Prudential Real Estate Investors 49.90% 49.90% 834,000 717 Fifth Avenue Jeff Sutton/Private Investor 10.92% 10.92% 119,500 800 Third Avenue Private Investors 60.52% 60.52% 526,000 919 Third Avenue (2) New York State Teacher's Retirement System 51.00% 51.00% 1,454,000 11 West 34th Street Private Investor/Jeff Sutton 30.00% 30.00% 17,150 280 Park Avenue Vornado Realty Trust 50.00% 50.00% 1,219,158 1552-1560 Broadway (3) Jeff Sutton 50.00% 50.00% 57,718 10 East 53rd Street Canadian Pension Plan Investment Board 55.00% 55.00% 354,300 21 East 66th Street (4) Private Investors 32.28% 32.28% 13,069 650 Fifth Avenue (5) Jeff Sutton 50.00% 50.00% 69,214 121 Greene Street Jeff Sutton 50.00% 50.00% 7,131 55 West 46th Street Prudential Real Estate Investors 25.00% 25.00% 347,000 Stonehenge Portfolio (6) Various Various Various 1,439,016 605 West 42nd Street The Moinian Group 20.00% 20.00% 927,358 11 Madison Avenue PGIM Real Estate 60.00% 60.00% 2,314,000 333 East 22nd Street Private Investors 33.33% 33.33% 26,926 400 East 57th Street (7) BlackRock, Inc and Stonehenge Partners 51.00% 41.00% 290,482 One Vanderbilt National Pension Service of Korea/Hines Interest LP 71.01% 71.01% — Worldwide Plaza RXR Realty / New York REIT / Private Investor 24.35% 24.35% 2,048,725 1515 Broadway Allianz Real Estate of America 56.87% 56.87% 1,750,000 2 Herald Square Israeli Institutional Investor 51.00% 51.00% 369,000 115 Spring Street Private Investor 51.00% 51.00% 5,218 (1) Ownership interest and economic interest represent the Company's interests in the joint venture as of December 31, 2019 . Changes in ownership or economic interests within the current year are disclosed in the notes below. (2) In January 2018, the partnership agreement for our investment was modified resulting in the Company no longer having a controlling interest in this investment. As a result, the investment was deconsolidated as of January 1, 2018. We recorded our non-controlling interest at fair value resulting in a $49.3 million fair value adjustment in the consolidated statement of operations. This fair value was allocated to the assets and liabilities, including identified intangibles of the joint venture. (3) The acquisition price represents only the purchase of the 1552 Broadway interest which comprised approximately 13,045 square feet. The joint venture also owns a long-term leasehold interest in the retail space and certain other spaces at 1560 Broadway, which is adjacent to 1552 Broadway. (4) We hold a 32.28% interest in three retail and one residential units at the property and a 16.14% interest in three residential units at the property. (5) The joint venture owns a long-term leasehold interest in the retail space at 650 Fifth Avenue. In connection with the ground lease obligation, SLG provided a performance guaranty and our joint venture partner executed a contribution agreement to reflect its pro rata obligation. In the event the property is converted into a condominium unit and the landlord elects the purchase option, the joint venture shall be obligated to acquire the unit at the then fair value. (6) We, together with our joint venture partner, closed on the sale of one property from the Stonehenge Portfolio in February 2019 and another property in May 2019. These sales are further described under Sale of Joint Venture Interest of Properties below. (7) In October 2016, we sold a 49% interest in this property. Our interest in the property was sold within a consolidated joint venture owned 90% by the Company and 10% by Stonehenge. The transaction resulted in the deconsolidation of the venture's remaining 51% interest in the property. Our joint venture with Stonehenge remains consolidated resulting in the combined 51% interest being shown within investments in unconsolidated joint ventures on our balance sheet. Acquisition, Development and Construction Arrangements Based on the characteristics of the following arrangements, which are similar to those of an investment, combined with the expected residual profit of not greater than 50% , we have accounted for these debt and preferred equity investments under the equity method. As of December 31, 2019 and 2018 , the carrying value for acquisition, development and construction arrangements were as follows (dollars in thousands): Loan Type December 31, 2019 December 31, 2018 Maturity Date Mezzanine Loan $ — 44,357 $ — $ 44,357 Disposition of Joint Venture Interests or Properties The following table summarizes the investments in unconsolidated joint ventures sold during the years ended December 31, 2019 , 2018 , and 2017 : Property Ownership Interest Sold Disposition Date Gross Asset Valuation (in thousands) (1) Gain (Loss) on Sale (in thousands) (2) 21 East 66th Street (3) 1 residential unit December 2019 $ 2,900 $ 279 521 Fifth Avenue 50.50% May 2019 381,000 57,874 131-137 Spring Street 20.00% January 2019 216,000 17,660 Stonehenge Portfolio (partial) Various Various - 2019 468,800 (2,408 ) 3 Columbus Circle 48.90% November 2018 851,000 160,368 Mezzanine Loan (4) 33.33% August 2018 15,000 N/A 724 Fifth Avenue 49.90% July 2018 365,000 64,587 Jericho Plaza 11.67% June 2018 117,400 147 1745 Broadway 56.87% May 2018 633,000 52,038 175-225 Third Street Brooklyn, New York 95.00% April 2018 115,000 19,483 1515 Broadway (5) 13.00% February 2018 1,950,000 — Stonehenge Portfolio (partial) Various Various - 2018 331,100 (6,063 ) 102 Greene Street 10.00% September 2017 43,500 283 76 11th Avenue (6) 33.33% May 2017 138,240 N/A Stonehenge Portfolio (partial) Various March 2017 300,000 871 (1) Represents implied gross valuation for the joint venture or sales price of the property. (2) Represents the Company's share of the gain or (loss). The gain on sale is net of $4.0 million , $11.7 million , and $0 of employee compensation accrued in connection with the realization of these investment gains in the years ended December 31, 2019 , 2018 , and 2017 , respectively. Additionally, gain (loss) amounts do not include adjustments for expenses recorded in subsequent periods. (3) We, together with our joint venture partner, closed on the sale of one residential unit at the property. (4) Our investment in a joint venture that owned a mezzanine loan secured by a commercial property in midtown Manhattan was repaid after the joint venture received repayment of the underlying loan. (5) Our investment in 1515 Broadway was marked to fair value on January 1, 2018 upon adoption of ASC 610-20. (6) Our investment in a joint venture that owned two mezzanine notes secured by interests in the entity that owns 76 11th Avenue was repaid after the joint venture received repayment of the underlying loans. In May 2017, we recognized a gain of $13.0 million related to the sale in May 2014 of our ownership interest in 747 Madison Avenue. The sale did not meet the criteria for sale accounting in May of 2014 and, therefore, remained on our consolidated financial statements. The sale criteria was met in May of 2017 resulting in recognition of the deferred gain on the sale. Joint Venture Mortgages and Other Loans Payable We generally finance our joint ventures with non-recourse debt. In certain cases we may provide guarantees or master leases for tenant space, which terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. The mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at December 31, 2019 and 2018 , respectively, are as follows (dollars in thousands): Property Economic Interest (1) Maturity Date Interest Rate (2) December 31, 2019 December 31, 2018 Fixed Rate Debt: 717 Fifth Avenue (mortgage) 10.92 % July 2022 4.45% $ 300,000 $ 300,000 717 Fifth Avenue (mezzanine) 10.92 % July 2022 5.50% 355,328 355,328 650 Fifth Avenue (mortgage) 50.00 % October 2022 4.46% 210,000 210,000 650 Fifth Avenue (mezzanine) 50.00 % October 2022 5.45% 65,000 65,000 21 East 66th Street 32.28 % April 2023 3.60% 12,000 12,000 919 Third Avenue 51.00 % June 2023 5.12% 500,000 500,000 1515 Broadway 56.87 % March 2025 3.93% 838,546 855,876 11 Madison Avenue 60.00 % September 2025 3.84% 1,400,000 1,400,000 800 Third Avenue 60.52 % February 2026 3.37% 177,000 177,000 400 East 57th Street 41.00 % November 2026 3.00% 97,735 99,828 Worldwide Plaza 24.35 % November 2027 3.98% 1,200,000 1,200,000 Stonehenge Portfolio (3) Various Various 3.50% 196,112 321,076 521 Fifth Avenue (4) — 170,000 Total fixed rate debt $ 5,351,721 $ 5,666,108 Floating Rate Debt: 10 East 53rd Street (5) 55.00 % February 2020 L+ 2.25% $ 170,000 $ 170,000 280 Park Avenue 50.00 % September 2020 L+ 1.73% 1,200,000 1,200,000 1552 Broadway 50.00 % October 2020 L+ 2.65% 195,000 195,000 121 Greene Street 50.00 % November 2020 L+ 1.50% 15,000 15,000 11 West 34th Street 30.00 % January 2021 L+ 1.45% 23,000 23,000 100 Park Avenue 49.90 % February 2021 L+ 1.75% 356,972 360,000 One Vanderbilt (6) 71.01 % September 2021 L+ 2.50% 732,928 375,000 2 Herald Square 51.00 % November 2021 L+ 1.45% 190,000 133,565 55 West 46th Street (7) 25.00 % August 2022 L+ 1.25% 192,524 185,569 115 Spring Street 51.00 % September 2023 L+ 3.40% 65,550 — 605 West 42nd Street 20.00 % August 2027 L+ 1.44% 550,000 550,000 21 East 66th Street 32.28 % June 2033 1 Year Treasury+ 2.75% 712 1,571 131-137 Spring Street (8) — 141,000 103 East 86th Street (9) — 38,000 Total floating rate debt $ 3,691,686 $ 3,387,705 Total joint venture mortgages and other loans payable $ 9,043,407 $ 9,053,813 Deferred financing costs, net (91,538 ) (103,191 ) Total joint venture mortgages and other loans payable, net $ 8,951,869 $ 8,950,622 (1) Economic interest represents the Company's interests in the joint venture as of December 31, 2019 . Changes in ownership or economic interests, if any, within the current year are disclosed in the notes to the investment in unconsolidated joint ventures table above. (2) Interest rates as of December 31, 2019 , taking into account interest rate hedges in effect during the period. Floating rate debt is presented with the stated interest rate spread over 30-day LIBOR, unless otherwise specified. (3) Amount is comprised of $132.6 million and $63.5 million in fixed-rate mortgages that mature in April 2028 and July 2029, respectively. (4) In May 2019, we, together with our joint venture partner, closed on the sale of the property. (5) This loan was refinanced in February 2020. (6) This loan is a $1.75 billion construction facility, with reductions in interest cost based on meeting certain conditions, and has an initial five year term with two one year extension options. Advances under the loan are subject to incurred costs, funded equity, loan to value thresholds, and entering into construction contracts. (7) In August 2019, this loan was refinanced with a new $192.5 million mortgage loan. This loan has a committed amount of $198.0 million, of which $5.5 million was unfunded as of December 31, 2019. (8) In January 2019, we closed on the sale of our interest in the property. (9) In February 2019, we, together with our joint venture partner, closed on the sale of the property. We are entitled to receive fees for providing management, leasing, construction supervision and asset management services to certain of our joint ventures. We earned $13.0 million , $14.2 million and $22.6 million from these services, net of our ownership share of the joint ventures, for the years ended December 31, 2019 , 2018 , and 2017 , respectively. In addition, we have the ability to earn incentive fees based on the ultimate financial performance of certain of the joint venture properties. The combined balance sheets for the unconsolidated joint ventures, at December 31, 2019 and 2018 , are as follows (unaudited, in thousands): December 31, 2019 December 31, 2018 Assets (1) Commercial real estate property, net $ 14,349,628 $ 14,347,673 Cash and restricted cash 336,189 381,301 Tenant and other receivables and deferred rents receivable 371,065 273,141 Debt and preferred equity investments, net — 44,357 Other assets 2,039,429 2,187,166 Total assets $ 17,096,311 $ 17,233,638 Liabilities and equity (1) Mortgages and other loans payable, net $ 8,951,869 $ 8,950,622 Deferred revenue/gain 1,501,616 1,660,838 Lease liabilities 897,380 637,168 Other liabilities 308,304 309,145 Equity 5,437,142 5,675,865 Total liabilities and equity $ 17,096,311 $ 17,233,638 Company's investments in unconsolidated joint ventures $ 2,912,842 $ 3,019,020 (1) The combined assets, liabilities and equity for the unconsolidated joint ventures reflects the effect of step ups in basis on the retained non-controlling interests in deconsolidated investments as a result of the adoption of ASC 610-20 in January 2018. In addition, at December 31, 2019, $133.1 million of net unamortized basis differences between the amount at which our investments are carried and our share of equity in net assets of the underlying property will be amortized through equity in net income (loss) from unconsolidated joint ventures over the remaining life of the underlying items having given rise to the differences. The combined statements of operations for the unconsolidated joint ventures, from acquisition date through the years ended December 31, 2019 , 2018 , and 2017 are as follows (unaudited, in thousands): Year Ended December 31, 2019 2018 2017 Total revenues $ 1,163,534 $ 1,244,804 $ 904,230 Operating expenses 202,881 219,440 157,610 Real estate taxes 212,355 226,961 142,774 Operating lease rent 24,816 18,697 16,794 Interest expense, net of interest income 372,408 363,055 250,063 Amortization of deferred financing costs 19,336 21,634 23,026 Transaction related costs — — 146 Depreciation and amortization 407,697 421,458 279,419 Total expenses $ 1,239,493 $ 1,271,245 $ 869,832 Loss on early extinguishment of debt (1,031 ) — (7,899 ) Net (loss) income before gain on sale (1) $ (76,990 ) $ (26,441 ) $ 26,499 Company's equity in net (loss) income from unconsolidated joint ventures (1) $ (34,518 ) $ 7,311 $ 21,892 (1) The combined statements of operations and the Company's equity in net income (loss) for the unconsolidated joint ventures reflects the effect of step ups in basis on the retained non-controlling interests in deconsolidated investments as a result of the adoption of ASC 610-20 in January 2018. |