3.    RECENT TRANSACTIONS



Acquisitions

The Company acquired the following office property (which was determined to be an asset acquisition in accordance with ASU 2017-01) during the three months ended March 31, 2019 (dollars in thousands):





The acquisition cost of 99 Wood Avenue was allocated to the net assets acquired, as follows (in thousands):



On April 1, 2019, the Company completed the acquisition of a 377-unit multi-family rental property located in Jersey City, New Jersey for approximately $264 million, which was funded primarily using funds available with the Company’s qualified intermediaries, and through borrowing under the Company’s unsecured revolving credit facility.



Consolidation

On January 31, 2019, the Company, which held a 24.27 percent subordinated interest in the unconsolidated joint venture, Marbella Tower Urban Renewal Associates South LLC, a 311-unit multi-family operating property located in Jersey City, New Jersey, acquired its equity partner’s 50 percent preferred controlling interest for $77.5 million in cash.  The property was subject to a mortgage loan that had a principal balance of $74.7 million.  The acquisition was funded primarily using available cash.  Concurrently with the closing, the joint venture repaid in full the property’s $74.7 million mortgage loan and obtained a new loan collateralized by the property in the amount of $117 million, which bears interest at 4.2 percent and matures in August 2026.  The Company received $43.3 million in distribution from the loan proceeds which was used to acquire the equity partner’s 50 percent interest.  As the result of the acquisition, the Company increased its ownership of the property from a 24.27 percent subordinated interest to a 74.27 percent controlling interest.  In accordance with ASC 810, Consolidation, the Company evaluated the acquisition and determined that the entity meets the criteria of a VIE.  As such, the Company consolidated the asset upon acquisition and accordingly, remeasured its equity interests, as required by the FASB’s consolidation guidance, at fair value (based upon the income approach using current rates and market cap rates and discount rates).  As a result, the Company recorded a gain on change of control of interests of $13.8 million (a non-cash item) in the three months ended March 31, 2019, in which the Company accounted for the transaction as a VIE that is not a business in accordance with ASC 810-10-30-4.  Additional non-cash items included in the acquisition were the Company’s carrying value of its interest in the joint venture of $15.3 million and the noncontrolling interest’s fair value of $13.7 million.  See Note 9: Mortgages, Loans Payable and Other Obligations.



Net assets recorded upon consolidation were as follows (in thousands):





Dispositions/Rental Property Held for Sale

The Company disposed of the following office and multi-family properties during the three months ended March 31, 2019 (dollars in thousands):









The Company identified as held for sale a 348,000 square-foot office property located in Paramus, New Jersey as of March 31, 2019.  The total estimated sales proceeds, net of expected selling costs, from the sale is expected to be approximately $36.9 million.  The Company determined that the carrying value of the property was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $2.5 million for the three months ended March 31, 2019.



The following table summarizes the rental property held for sale, net, as of March 31, 2019 (dollars in thousands): 





Other assets and liabilities related to the rental property held for sale, as of March 31, 2019, include $2.1 million in Deferred charges and other assets, $1.9 million in Unbilled rents receivable and $1.2 million in Accounts payable, accrued expenses and other liabilities.  Approximately $3.7 million of these assets and $0.1 million of these liabilities are expected to be removed with the completion of the sales.



Consolidated Joint Venture Activity

On March 26, 2019, the Company, which held a 90 percent controlling interest in the joint venture, XS Hotel Urban Renewal LLC, which owns a 372-key hotel (164 keys in-service Residence Inn and 208 keys in-development Marriott Envue) located in Weehawken, New Jersey, acquired its partner’s 10 percent interest for $5 million in cash.  As a result of the acquisition, the Company increased its ownership of the property to 100 percent.



Unconsolidated Joint Venture Activity

On February 28, 2019, the Company sold its interest in the Red Bank Corporate Plaza joint venture that owns an operating property located in Red Bank, New Jersey for a sales price of $4.2 million, and realized a gain on the sale of the unconsolidated joint venture of $0.9 million.