3.    RECENT TRANSACTIONS



Management Changes

On March 15, 2018, the Company announced the appointment of Michael J. DeMarco, Chief Executive Officer of the General Partner, to its Board of Directors effective immediately.  Mr. DeMarco’s addition to the Board expanded the total number of members from nine to ten.



On June 15, 2018, the Company announced that the employment of Mitchell E. Rudin as Vice Chairman of the General Partner was terminated effective as of June 5, 2018.  In addition, the Company also restructured certain corporate and property management personnel during the three months ended June 30, 2018.   As a result of the executive management changes and other personnel changes, the Company incurred total net severance and related expenses in the quarter of $1.79 million, which was included in general and administrative expense (net of a reversal of $1.55 million of amortization of stock compensation expense due to the forfeiture of the unvested securities).



On January 29, 2018, the Company announced the appointment of David J. Smetana as chief financial officer and Nicholas Hilton as executive vice president of leasing of the General Partner.  Mr. Smetana began to perform his duties as chief financial officer and Anthony Krug ceased to serve as chief financial officer immediately following the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.  Mr. Krug remained an employee of the Company and provided transition services through March 31, 2018.  Mr. Hilton’s employment commenced on February 12, 2018 following the departure of Christopher DeLorenzo.  In addition, the Company also restructured certain corporate and property management personnel during the three months ended March 31, 2018.   As a result of the executive management changes and other personnel changes, the Company incurred total severance and related expenses in the quarter of $5.05 million, $4.5 million of which was included in general and administrative expense (of which $0.6 million pertained to stock compensation expense) and $539,000 of which was in operating services for the period.



As a result of the executive management changes as well as other personnel changes during the period, the Company incurred total severance and related expenses in the six month period ended June 30, 2018 of $6.85 million, $6.3 million of which was included in general and administrative expense (including $0.6 million of stock compensation expense due to accelerated vesting and a net reversal of $1.55 million of amortization of stock compensation expense due to the forfeiture of unvested securities) and  $539,000 of which was included in operating services for the period.



Properties Commencing Initial Operations

The following property commenced initial operations during the six months ended June 30, 2018 (dollars in thousands):





 

Dispositions/Rental Property Held for Sale

The Company disposed of the following office properties during the six months ended June 30, 2018 (dollars in thousands):





Rental Property Held for Sale, Net

The Company identified as held for sale five office properties totaling approximately 629,000 square feet as of June 30, 2018.  The properties are located in Paramus, Hamilton and Rochelle Park, New Jersey and White Plains, New York. The total estimated sales proceeds, net of expected selling costs, from the sales are expected to be approximately $70.5 million.    The Company determined that the carrying value of one of the office properties was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $0.5 million during the three and six months ended June 30, 2018. 



The following table summarizes the rental property held for sale, net, as of June 30, 2018:  (dollars in thousands)    





Other assets and liabilities related to the rental properties held for sale, as of June 30, 2018, include $3.4 million in Deferred charges, and other assets, $1.1 million in Unbilled rents receivable and $2.1 million in Accounts payable, accrued expenses and other liabilities.  Approximately $4.1 million of these assets and $1.1 million of these liabilities are expected to be removed with the completion of the sales.