Quarterly report pursuant to Section 13 or 15(d)

Investments In Unconsolidated Joint Ventures

v3.4.0.3
Investments In Unconsolidated Joint Ventures
3 Months Ended
Mar. 31, 2016
Investments In Unconsolidated Joint Ventures [Abstract]  
Investments In Unconsolidated Joint Ventures

4.    INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES



As of March 31, 2016, the Company had an aggregate investment of approximately $303.6 million in its equity method joint ventures.  The Company formed these ventures with unaffiliated third parties, or acquired interests in them, to develop or manage primarily office and multi-family rental properties, or to acquire land in anticipation of possible development of office and multi-family rental properties.  As of March 31, 2016, the unconsolidated joint ventures owned: 36 office and two retail properties aggregating approximately 5.7 million square feet, 12 multi-family properties totaling 3,972 apartments, a 350-room hotel, development projects for up to approximately 1,074 apartments; and interests and/or rights to developable land parcels able to accommodate up to 2,910 apartments and 1.4 million square feet of office space.  The Company’s unconsolidated interests range from 7.5 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.



The amounts reflected in the following tables (except for the Company’s share of equity in earnings) are based on the historical financial information of the individual joint ventures.  The Company does not record losses of the joint ventures in excess of its investment balances unless the Company is liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture.  The outside basis portion of the Company’s investments in joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed.  Unless otherwise noted below, the debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.



The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures.  As of March 31, 2016, such debt had a total facility amount of $492.1 million of which the Company agreed to guarantee up to $66.3 million.  As of March 31, 2016, the outstanding balance of such debt totaled $286.7 million of which $44.8 million was guaranteed by the Company.  The Company also posted a $3.6 million letter of credit in support of the South Pier at Harborside joint venture, half of which is indemnified by Hyatt Corporation, the Company’s joint venture partner.  The Company performed management, leasing, development and other services for the properties owned by the unconsolidated joint ventures and recognized $1.0 million and $1.6 million for such services in the three months ended March 31, 2016 and 2015, respectively.  The Company had $0.7 million and $0.8 million in accounts receivable due from its unconsolidated joint ventures as of March 31, 2016 and December 31, 2015



Included in the Company’s investments in unconsolidated joint ventures as of March 31, 2016 are five unconsolidated development joint ventures, which are VIEs for which the Company is not the primary beneficiary.  These joint ventures are primarily established to develop real estate property for long-term investment and were deemed VIEs primarily based on the fact that the equity investment at risk was not sufficient to permit the entities to finance their activities without additional financial support.  The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period.  The Company determined that it was not the primary beneficiary of these VIEs based on the fact that the Company has shared control of these entities along with the entity’s partners and therefore does not have controlling financial interests in these VIEs.  The Company’s aggregate investment in these VIEs was approximately $177.1 million as of March 31, 2016.  The Company’s maximum exposure to loss as a result of its involvement with these VIEs is estimated to be approximately $210.8 million, which includes the Company’s current investment and estimated future funding commitments/guarantees of approximately $33.7 million.  The Company has not provided financial support to these VIEs that it was not previously contractually required to provide.  In general, future costs of development not financed through third party will be funded with capital contributions from the Company and its outside partners in accordance with their respective ownership percentages.   





The following is a summary of the Company's unconsolidated joint ventures as of March 31, 2016 and December 31, 2015: (dollars in thousands, including footnotes)





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Property Debt

 



Number of

Company's

 

 

Carrying Value

 

 

As of March 31, 2016

 



Apartment Units

Effective

 

 

March 31,

 

 

December 31,

 

 

 

Maturity

Interest

 

Entity / Property Name

or Square Feet (sf)

Ownership % (a)

 

 

2016

 

 

2015

 

 

Balance

Date

Rate

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marbella RoseGarden, L.L.C./ Marbella  (b)

412 

units

24.27 

%

 

$

15,486 

 

$

15,569 

 

$

95,000 

05/01/18

4.99 

%

 

RoseGarden Monaco Holdings, L.L.C./ Monaco   (b)

523 

units

15.00 

%

 

 

646 

 

 

937 

 

 

165,000 

02/01/21

4.19 

%

 

PruRose Port Imperial South 15, LLC /RiversEdge at Port Imperial (b)

236 

units

50.00 

%

 

 

 -

 

 

 -

 

 

57,500 

09/01/20

4.32 

%

 

Rosewood Morristown, L.L.C. / Metropolitan at 40 Park  (c) (d)

130 

units

12.50 

%

 

 

5,741 

 

 

5,723 

 

 

45,756 

(e)

(e)

 

 

PruRose Riverwalk G, L.L.C./ RiverTrace at Port Imperial   (b) (f)

316 

units

25.00 

%

 

 

 -

 

 

 -

 

 

79,392 

07/15/21

6.00 

%

(g)

Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C)  (b)

355 

units

7.50 

%

 

 

 -

 

 

 -

 

 

128,100 

03/01/30

4.00 

%

 

Crystal House Apartments Investors LLC / Crystal House  (h)

798 

units

25.00 

%

 

 

28,855 

 

 

28,114 

 

 

165,000 

04/01/20

3.17 

%

 

Portside Master Company, L.L.C./ Portside at Pier One - Bldg 7  (b) (f)

175 

units

38.25 

%

 

 

 -

 

 

 -

 

 

42,500 

12/04/17

L+2.50

%

(i)

PruRose Port Imperial South 13, LLC / RiverParc at Port Imperial  (b)

280 

units

20.00 

%

 

 

 -

 

 

 -

 

 

70,731 

06/27/16

L+2.15

%

(j)

Roseland/Port Imperial Partners, L.P./ Riverwalk C  (b) (k)

363 

units

20.00 

%

 

 

1,678 

 

 

1,678 

 

 

 -

-

-

 

 

RoseGarden Marbella South, L.L.C./ Marbella II 

311 

units

24.27 

%

 

 

17,155 

 

 

16,728 

 

 

69,681 

03/30/17

L+2.25

%

(l)

Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B)  (b)

227 

units

7.50 

%

 

 

 -

 

 

 -

 

 

81,900 

03/01/30

4.00 

%

 

Riverpark at Harrison I, L.L.C./ Riverpark at Harrison

141 

units

45.00 

%

 

 

2,426 

 

 

2,544 

 

 

30,000 

08/01/25

3.70 

%

 

Capitol Place Mezz LLC / Station Townhouses

378 

units

50.00 

%

 

 

45,500 

 

 

46,267 

 

 

100,700 

07/01/33

4.82 

%

(m)

Harborside Unit A Urban Renewal, L.L.C. / URL Harborside

763 

units

85.00 

%

 

 

97,615 

 

 

96,799 

 

 

92,937 

08/01/29

5.197 

%

(n)

RoseGarden Monaco, L.L.C./ San Remo Land

250 

potential units

41.67 

%

 

 

1,356 

 

 

1,339 

 

 

 -

-

-

 

 

Grand Jersey Waterfront URA, L.L.C./ Liberty Landing

850 

potential units

50.00 

%

 

 

337 

 

 

337 

 

 

 -

-

-

 

 

Hillsborough 206 Holdings, L.L.C./ Hillsborough 206

160,000 

sf

50.00 

%

 

 

1,962 

 

 

1,962 

 

 

 -

-

-

 

 

Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations)

1,225,000 

sf

50.00 

%

 

 

4,132 

 

 

4,055 

 

 

 -

-

-

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Red Bank Corporate Plaza, L.L.C./ Red Bank

92,878 

sf

50.00 

%

 

 

4,250 

 

 

4,140 

 

 

14,950 

05/17/16

L+3.00

%

(o)

12 Vreeland Associates, L.L.C./ 12 Vreeland Road

139,750 

sf

50.00 

%

 

 

5,974 

 

 

5,890 

 

 

12,171 

07/01/23

2.87 

%

 

BNES Associates III / Offices at Crystal Lake

106,345 

sf

31.25 

%

 

 

2,101 

 

 

2,295 

 

 

5,973 

11/01/23

4.76 

%

 

KPG-P 100 IMW JV, LLC / 100 Independence Mall West

339,615 

sf

33.33 

%

 

 

 -

 

 

 -

 

 

61,500 

09/09/16

L+7.00

%

(p)

Keystone-Penn

1,842,820 

sf

(q)

 

 

 

 -

 

 

 -

 

 

228,600 

(r)

(r)

 

 

Keystone-TriState

1,266,384 

sf

(s)

 

 

 

3,480 

 

 

3,958 

 

 

212,536 

(t)

(t)

 

 

KPG-MCG Curtis JV, L.L.C./ Curtis Center  (u)

885,000 

sf

50.00 

%

 

 

62,247 

 

 

59,858 

 

 

(v)

(v)

(v)

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial  (b)

30,745 

sf

20.00 

%

 

 

1,742 

 

 

1,758 

 

 

 -

-

-

 

 

South Pier at Harborside / Hyatt Regency Jersey City on the Hudson

350 

rooms

50.00 

%

 

 

(w)

 

 

(w)

 

 

63,384 

(x)

(x)

 

 

Other (y)

 

 

 

 

 

 

964 

 

 

3,506 

 

 

 -

-

-

 

 

Totals:

 

 

 

 

 

$

303,647 

 

$

303,457 

 

$

1,823,311 

 

 

 

 









 



 

(a)      

Company's effective ownership % represents the Company's entitlement to residual distributions after payments of priority returns, where applicable.

(b)      

The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the Company is not expected to meaningfully participate in the venture's cash flows in the near term.

(c)      

Through the joint venture, the Company also owns a 12.5 percent interest in a 50,973 square feet retail building ("Shops at 40 Park") and a 25 percent interest in a to-be-built 59-unit, five story multi-family rental development property ("Lofts at 40 Park"). 

(d)      

The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the payment of the outstanding balance remaining on a note ($975 as of December 31, 2015), and is not expected to meaningfully participate in the venture's cash flows in the near term.

(e)      

Property debt balance consists of: (i) a loan, collateralized by the Metropolitan at 40 Park, with a balance of $38,218, bears interest at 3.25 percent, matures in September 2020; (ii) an amortizable loan, collateralized by the Shops at 40 Park, with a balance of $6,421, bears interest at 3.63 percent, matures in August 2018; and (iii) a loan, collateralized by the Lofts at 40 Park, with a balance of $1,117, bears interest at LIBOR plus 250 basis points and matures in September 2016.  The Shops at 40 Park mortgage loan also provides for additional borrowing proceeds of $1 million based on certain preferred thresholds being achieved.

(f)      

On April 1, 2016, the Company acquired the equity interests of its joint venture partner in Portside Apartment Holdings, L.L.C and PruRose Riverwalk G, L.L.C. for $38.1 million and $11.3 million, respectively, which increased its ownership to 85 percent in Portside Apartment Holdings, LLC and 50 percent in PruRose Riverwalk G, L.L.C.  (See Note 3: Recent Transactions – Acquisitions).

(g)  

The permanent loan has a maximum borrowing amount of $80,249.

(h)      

The Company also owns a 50 percent interest in a vacant land to accommodate the development of approximately 295 additional units of which 252 are currently approved.

(i)       

The construction loan has a maximum borrowing amount of $42,500 and provides, subject to certain conditions, two two-year extension options with a fee of 12.5 basis points for the first two-year extension and 25 basis points for the second two-year extension.

(j)     

The construction loan has a maximum borrowing amount of $73,350 and provides, subject to certain conditions, one-year extension option followed by a six-month extension option with a fee of 25 basis points each. The joint venture has a swap agreement that fixes the all-in rate to 2.79 percent per annum on an initial notional amount of $1,620, increasing to $69,500 for the period from July 1, 2013 to January 1, 2016.

(k)      

The Company also owns a 20 percent residual interest in undeveloped land parcels: parcels 6, I, and J ("Port Imperial North Land") that can accommodate the development of 836 apartment units.

(l)      

The construction loan has a maximum borrowing amount of $77,400 and provides, subject to certain conditions, two one-year extension options with a fee of 25 basis points for each year.

(m)       

The construction/permanent loan has a maximum borrowing amount of $100,700 with amortization starting in August 2017.

(n)    

The construction/permanent loan has a maximum borrowing amount of $192,000.

(o)      

The joint venture has a swap agreement that fixes the all-in rate to 3.99375 percent per annum on an initial notional amount of $13,650 and then adjusting in accordance with an amortization schedule, which is effective from October 17, 2011 through loan maturity.

(p)       

The mortgage loan has two one-year extension options, subject to certain conditions.

(q)      

The Company’s equity interests in the joint ventures will be subordinated to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally. 

(r)      

Principal balance of $127,600 bears interest at 5.114 percent and matures on August 27, 2023; principal balance of $45,500 bears interest at 5.01 percent and matures on September 6, 2025; principal balance of $33,825 bears interest at rates ranging from LIBOR+5.0 percent to LIBOR+5.75 percent and matures on August 27, 2016; principal balance of $11,250 bears interest at LIBOR+5.5 percent and matures on January 9, 2019; principal balance of $10,425 bears interest at LIBOR+6.0 percent matures on August 31, 2016.

(s)     

Includes the Company’s pari-passu interests of $3.5 million in five properties and Company’s subordinated equity interests to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally.

(t)      

Principal balance of $43,954 bears interest at 5.38 percent and matures on July 1, 2017; principal balance of $75,882 bears interest at rates ranging from 5.65 percent to 6.75 percent and matures on September 9, 2017; principal balance of $14,250 bears interest at 4.88 percent and matures on July 6, 2024; principal balance of $63,400 bears interest at 4.93 percent and matures on July 6, 2044; principal balance of $15,050 bears interest at 4.71 percent and matures on August 6, 2044.

(u)

Includes undivided interests in the same manner as investments in noncontrolling partnership, pursuant to ASC 970-323-25-12. 

(v)

See Note 10: Mortgages, Loans Payable and Other Obligations for debt secured by interests in these assets.

(w)

The negative carrying value for this venture of $4,235 and $3,317 as of March 31, 2016 and 2015, respectively, were included in accounts payable, accrued expenses and other liabilities.

(x)      

Balance includes: (i) mortgage loan, collateralized by the hotel property, with a balance of $59,790, bears interest at 6.15 percent and matures in November 2016, and (ii) loan with a balance of $3,594, bears interest at fixed rates ranging from 6.09 percent to 6.62 percent and matures in August 1, 2020.  The Company posted a $3.6 million letter of credit in support of this loan, half of which is indemnified by the partner.

(y)

The Company owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses are related to its core operations. These ventures are not expected to significantly impact the Company's operations in the near term. 













 

The following is a summary of the Company’s equity in earnings (loss) of unconsolidated joint ventures for the three months ended March 31, 2016  and 2015: (dollars in thousands)



 

 

 

 

 



 

 



 

Three Months Ended



 

March 31,

Entity / Property Name

 

2016

 

 

2015

Multi-family

 

 

 

 

 

Marbella RoseGarden, L.L.C./ Marbella 

$

84 

 

$

61 

RoseGarden Monaco Holdings, L.L.C./ Monaco

 

(291)

 

 

(317)

PruRose Port Imperial South 15, LLC /RiversEdge at Port Imperial

 

 -

 

 

 -

Rosewood Morristown, L.L.C. / Metropolitan at 40 Park

 

(81)

 

 

(94)

PruRose Riverwalk G, L.L.C./ RiverTrace at Port Imperial 

 

 -

 

 

(254)

Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C)

 

 -

 

 

 -

Crystal House Apartments Investors LLC / Crystal House

 

(112)

 

 

(10)

Portside Master Company, L.L.C./ Portside at Pier One - Bldg 7

 

 -

 

 

(719)

PruRose Port Imperial South 13, LLC / RiverParc at Port Imperial 

 

 -

 

 

(225)

Roseland/Port Imperial Partners, L.P./ Riverwalk C

 

 -

 

 

(184)

RoseGarden Marbella South, L.L.C./ Marbella II

 

 -

 

 

 -

Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B)

 

 -

 

 

 -

Riverpark at Harrison I, L.L.C./ Riverpark at Harrison 

 

(28)

 

 

(173)

Capitol Place Mezz LLC / Station Townhouses

 

(767)

 

 

75 

Harborside Unit A Urban Renewal, L.L.C. / URL Harborside

 

(17)

 

 

 -

RoseGarden Monaco, L.L.C./ San Remo Land

 

 -

 

 

 -

Grand Jersey Waterfront URA, L.L.C./ Liberty Landing

 

(60)

 

 

(19)

Hillsborough 206 Holdings, L.L.C./ Hillsborough 206

 

(19)

 

 

 -

Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations)

 

77 

 

 

86 

Office

 

 

 

 

 

Red Bank Corporate Plaza, L.L.C./ Red Bank

 

101 

 

 

110 

12 Vreeland Associates, L.L.C./ 12 Vreeland Road

 

84 

 

 

(14)

BNES Associates III / Offices at Crystal Lake

 

(194)

 

 

68 

KPG-P 100 IMW JV, LLC / 100 Independence Mall West

 

 -

 

 

(384)

Keystone-Penn

 

 -

 

 

 -

Keystone-TriState

 

(477)

 

 

(1,348)

KPG-MCG Curtis JV, L.L.C./ Curtis Center

 

179 

 

 

196 

Other

 

 

 

 

 

Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial

 

(16)

 

 

(18)

South Pier at Harborside / Hyatt Regency Jersey City on the Hudson

 

(167)

 

 

(84)

Other

 

150 

 

 

(282)

Company's equity in earnings (loss) of unconsolidated joint ventures

$

(1,554)

 

$

(3,529)



The following is a summary of the financial position of the unconsolidated joint ventures in which the Company had investment interests as of March 31, 2016 and December 31, 2015: (dollars in thousands)



 

 

 

 

 

 



 

 

 

 

 

 



 

 

March 31,

 

 

December 31,



 

 

2016

 

 

2015

Assets:

 

 

 

 

 

 

   Rental property, net

 

$

1,736,842 

 

$

1,781,621 

   Other assets

 

 

294,444 

 

 

307,000 

   Total assets

 

$

2,031,286 

 

$

2,088,621 

Liabilities and partners'/

 

 

 

 

 

 

members' capital:

 

 

 

 

 

 

   Mortgages and loans payable

 

$

1,279,688 

 

$

1,298,293 

   Other liabilities

 

 

215,552 

 

 

215,951 

   Partners'/members' capital

 

 

536,046 

 

 

574,377 

   Total liabilities and

 

 

 

 

 

 

   partners'/members' capital

 

$

2,031,286 

 

$

2,088,621 

 

The following is a summary of the results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the  three months ended March 31, 2016 and 2015:  (dollars in thousands)



 

 

 

 

 



 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2016

 

 

2015

Total revenues

$

70,122 

 

$

74,477 

Operating and other expenses

 

(45,561)

 

 

(57,356)

Depreciation and amortization

 

(18,842)

 

 

(16,993)

Interest expense

 

(14,049)

 

 

(11,334)

Net loss

$

(8,330)

 

$

(11,206)