3.    RECENT TRANSACTIONS



Management Changes

On April 5, 2017, the Company announced that president Michael J. DeMarco would be assuming the title of chief executive officer of the Company and Mitchell Rudin, formerly the chief executive officer, was being named the vice chairman at the Company effective April 4, 2017.  Mr. DeMarco had joined the Company in 2015 as the president and chief operating officer.



Acquisitions

The Company acquired the following office properties (which were determined to be asset acquisitions in accordance with ASU 2017-01) during the nine months ended September 30, 2017 (dollars in thousands):





The purchase prices were allocated to the net assets acquired, as follows (in thousands):





(a)  Above market, in-place and below market leases are being amortized over a weighted-average term of 5.4 years. 



Consolidation

On February 3, 2017, the Operating Partnership issued 42,800 shares of a new class of 3.5 percent Series A Preferred Limited Partnership Units of the Operating Partnership (the “Series A Units”) valued at $42.8 million.  The Series A Units were issued to the Company’s partners in the Plaza VIII & IX Associates L.L.C. joint venture that owns a development site adjacent to the Company’s Harborside property in Jersey City, New Jersey as non-cash consideration for their approximate 37.5 percent interest in the joint venture.  Concurrent with the issuance of the Series A Units, the Company purchased from other partners in the Plaza VIII & IX Associates L.L.C. joint venture their approximate 12.5 percent interest for approximately $14.3 million in cash.  The results of these transactions increased the Company’s interests in the joint venture from 50 percent to 100 percent.  Upon these acquisitions, the Company consolidated Plaza VIII & IX Associates L.L.C., a voting interest entity, substantially all of which is comprised of land for development.  As an acquisition of the additional 50 percent of the land, the Company accounted for the transaction under a cost accumulation model, resulting in total consolidated assets of $60.6 million, substantially all of which is classified as land on the Balance Sheet.



On February 28, 2017, the Operating Partnership authorized the issuance of 9,213 shares of a new class of 3.5 percent Series A-1 Preferred Limited Partnership Units of the Operating Partnership (the “Series A-1 Units”).  9,122 Series A-1 Units were issued on February 28, 2017, valued at $9.1 million, to the Company’s partner in a joint venture with the Operating Partnership, which owns Monaco Towers in Jersey City, New Jersey that includes 523 apartment homes in two fifty-story towers with 558 parking spaces and 12,300 square feet of ground floor retail space.  The Series A-1 Units were issued as non-cash consideration for the partner’s approximate 13.8 percent ownership interest in the joint venture to increase the Company’s unconsolidated investment to 29 percent.  In April 2017, an additional 91 Series A-1 Units were issued by the Operating Partnership to purchase from other partners in the same joint venture their approximate 71.2 percent ownership interest for approximately $130.9 million in cash and $171.2 million in assumed debt in transactions which closed in April 2017. The results of these transactions increased the Company’s interests in the joint venture to 100 percent.  Upon these acquisitions, the Company consolidated RoseGarden Monaco Holdings, L.L.C., a voting interest entity. 



As an acquisition of the remaining interests in the venture which owns the Monaco Towers, the Company accounted for the transaction under a cost accumulation model, resulting in total consolidated net assets of $139.9 million which is allocated, as follows (in thousands):







(a)Above market, in-place and below market leases are being amortized over a weighted-average term of 8 months.



Dispositions/Rental Property Held for Sale

The Company disposed of the following office properties during the nine months ended September 30, 2017 (dollars in thousands):





Rental Property Held for Sale, Net

The Company identified as held for sale six office properties totaling approximately 1.3 million square feet as of September 30, 2017.  The properties are located in Parsippany, Woodcliff Lake, Paramus and Rochelle Park, New Jersey.  The total estimated sales proceeds from the sales are expected to be approximately $132 million.  The Company determined that the carrying value of three of the office properties was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $25.7 million as of September 30, 2017.     



The following table summarizes the rental property held for sale, net, as of September 30, 2017:  (dollars in thousands)    





Other assets and liabilities related to the rental property held for sale, as of September 30, 2017, include $7.5 million in deferred charges, and other assets, $3.9 million in unbilled rents receivable and $3.1 million in accounts payable, accrued expenses and other liabilities.  Approximately $10.7 million of these assets and $0.3 million of these liabilities are expected to be written off with the completion of the sales.



Rockpoint Transaction

On February 27, 2017, the Company, Roseland Residential Trust (“RRT”), the Company’s wholly-owned subsidiary through which the Company conducts its multi-family residential real estate operations, Roseland Residential, L.P. (“RRLP”), the operating partnership through which RRT conducts all of its operations, and certain other affiliates of the Company entered into an equity investment agreement (the “Investment Agreement”) with Rockpoint Group, L.L.C. and certain of its affiliates (collectively, “Rockpoint”).  The Investment Agreement provides for multiple equity investments by Rockpoint in RRLP from time to time for up to an aggregate of $300 million of equity units of limited partnership interests of RRLP (the “Rockpoint Units”).  The initial closing under the Investment Agreement occurred on March 10, 2017 for $150 million of Rockpoint Units.  Additional closings of Rockpoint Units to be issued and sold to Rockpoint pursuant to the Investment Agreement may occur from time to time in increments of not less than $10 million per closing, with the balance of the full $300 million by March 1, 2019.  See Note 14: Redeemable Noncontrolling Interests.



RRLP has been identified as a variable interest entity in which the Company is deemed to be the primary beneficiary.  As of September 30, 2017 and December 31, 2016, the Company’s consolidated RRLP entity had total assets of $1.8 billion and $1.3 billion, respectively, total mortgages & loan payable of $698.8 million and $480.7 million, respectively, and other liabilities of $87.3 million and $40.1 million, respectively.



Unconsolidated Joint Venture Activity

On January 31, 2017, the Company sold its interest in the KPG-P 100 IMW JV, LLC, Keystone-Penn and Keystone-Tristate joint ventures that own operating properties, located in Philadelphia, Pennsylvania for an aggregate sales price of $9.7 million and realized a gain on the sale of the unconsolidated joint venture of $7.4 million.



On February 15, 2017, the Company sold its 7.5 percent interest in the Elmajo Urban Renewal Associates, LLC and Estuary Urban Renewal Unit B, LLC joint ventures that own operating multi-family properties located in Weehawken, New Jersey for a sales price of $5.1 million and realized a gain on the sale of the unconsolidated joint venture of $5.1 million. 



On September 21, 2017, the RoseGarden Monaco, L.L.C. joint venture agreement was terminated.  Accordingly, the Company wrote off the carrying value of its investment in the joint venture and recorded a loss of $1.4 million on the disposition of its joint venture interest.



On September 29, 2017, the Company sold its interests in the KPG-MCG Curtis joint venture that owns an operating property located in Philadelphia, Pennsylvania for a sales price of $102.5 million, which included the retirement of the Company’s share in a mortgage payable of $75 million, and realized a gain on the sale of the unconsolidated joint venture of $12 million.  $8.9 million of the net sales proceeds from this sale were held by a qualified intermediary, which is considered non cash and recorded in deferred charges, goodwill and other assets.  See Note 5: Deferred Charges, Goodwill and Other Assets, Net.