2019

Consolidations

2020

On March 12, 2020, the Company, acquired its equity partner's 80 percent interest in Port Imperial North Retail L.L.C., a ground floor retail space totaling 30,745 square feet located at Port Imperial, West New York, New Jersey for $13.3 million in cash (funded through borrowing under the Company’s unsecured credit facility.) The results of the transaction increased the Company’s interest to 100 percent. Upon the acquisition, the Company consolidated the joint venture, a voting interest entity. As an acquisition of the remaining interests in the venture which owns the Port Imperial North Retail L.L.C., the Company accounted for the transaction as an asset acquisition under a cost accumulation model, and as such no gain on change of control of interest was recognized in consolidation, resulting in total consolidated net assets of $15.0 million, which are allocated as follows:

2019

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 rental 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 year ended December 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.

Real Estate Held for Sale/Discontinued Operations/Dispositions

2020

On December 19, 2019, the Company announced that its Board had determined to sell the Company’s entire suburban New Jersey office portfolio totaling approximately 6.6 million square feet, which excludes the Company’s office properties in Jersey City and Hoboken, New Jersey, (collectively, the “Suburban Office Portfolio”).  As the decision to sell the Suburban Office Portfolio represented a strategic shift in the Company’s operations, these properties’ results (other than a property classified as held for sale) are being classified as discontinued operations for all periods presented herein. As of December 31, 2020, the Company determined that a 350,000 square foot office property in the Suburban Office Portfolio, located in Holmdel, New Jersey no longer met the held for sale criteria. The property had originally been classified as held for sale as of December 31, 2019. The reclassified property has an aggregate book value of $19.8 million as of December 31, 2020, net of accumulated depreciation of $10.5 million (including catch-up depreciation). $2.8 million of previously recorded valuation allowance was reversed upon the reclassification of the asset from held for sale at December 31, 2020, and the corresponding property’s results and valuation allowance are also reclassified out of discontinued operations to continuing operations for all periods presented. See Note 7: Discontinued Operations.

In late 2019 through December 31, 2020, the Company completed the sale of 20 of these suburban office properties, totaling 3.2 million square feet, for net sales proceeds of $377.4 million.  As of December 31, 2020, the Company has identified as held for sale 16 office properties (comprised of six identified disposal groups) in the Suburban Office Portfolio, totaling 3.0 million square feet (of which the Company currently has 15 properties totaling 2.8 million square feet under contract for sale for aggregate gross proceeds of $652.4 million). As a result of a signed contract to dispose of a portfolio of four of the properties in an identified disposal group of assets held for sale, the Company may need to pay for significant costs to defease the mortgage loan encumbering the properties, which will be expensed when incurred at the time of such defeasance.  See Note 10: Mortgages, loans payable and other obligations.  In January 2021, the Company completed the sale of one of the properties held for sale, which was a 149,600 square foot office property, for a gross sales price of $38 million. See Note 7: Discontinued Operations.  

The Company plans to complete the sale of substantially all of its remaining Suburban Office Portfolio properties in 2021, and to use the available sales proceeds to pay down its corporate-level, unsecured indebtedness. However, the Company cannot predict whether or to what extent the timing of these sales and the expected amount may be impacted by the ongoing coronavirus pandemic (“COVID-19”). After the completion of the Suburban Office Portfolio sales, the Company’s holdings will consist of its waterfront class A office portfolio and its multi-family rental portfolio, and related development projects and land holdings.

Additionally, the Company also identified a retail pad leased to others and several developable land parcels as held for sale as of December 31, 2020. The properties are located in Parsippany, Madison, Short Hills, Edison and Red Bank, New Jersey. As a result of recent sales contract amendments and after considering the current market conditions as a result of the challenging economic climate with the current worldwide COVID-19 pandemic, the Company determined that the carrying value of six of the remaining held for sale properties (comprised of three disposal groups), and several land parcels held for sale was not expected to be recovered from estimated net sales proceeds, and accordingly, during the year ended December 31, 2020, recognized an unrealized loss allowance of $15.7 million for the properties ($14 million of which are from discontinued operations), respectively, and also recorded land and other impairments of $9.5 million. As of December 31, 2020, the Company determined that two developable land parcels located in Parsippany, New Jersey were no longer being held for sale.  The properties had originally been classified as held for sale as of December 31, 2019.  The reclassified properties had an aggregate book value of $11.3 million.

The following table summarizes the real estate held for sale, net, and other assets and liabilities (dollars in thousands):

The Company disposed of the following rental properties during the year ended December 31, 2020 (dollars in thousands):

The Company disposed of the following developable land holdings during the year ended December 31, 2020 (dollars in thousands):

2019

On December 19, 2019, the Company announced that, based on the recommendations of the Shareholder Value Committee, its Board had determined to sell the Suburban Office Portfolio.  As the decision to sell the Suburban Office Portfolio represented a strategic shift in the Company’s operations, the portfolio’s results are being classified as discontinued operations for all periods presented herein. See Note 7: Discontinued Operations.

During the year ended December 31, 2019, the Company completed the sale of two of these suburban office properties, totaling 497,000 square feet, for net sales proceeds of $52.2 million.  As of December 31, 2019, the Company identified as held for sale the remaining 35 office properties (comprised of 12 identified disposal groups) in the Suburban Office Portfolio, totaling 6.1 million square feet. See Note 7: Discontinued Operations.  

Additionally, the Company also identified a retail pad leased to others and several developable land parcels as held for sale as of December 31, 2019. The properties are located in Fort Lee, Parsippany, Madison, Short Hills, Edison, Red Bank and Florham Park. The Company determined that the carrying value of 21 of the properties (comprised of six disposal groups) and several land parcels held for sale was not expected to be recovered from estimated net sales proceeds, and accordingly, during the year ended December 31, 2019, recognized an unrealized loss allowance of $174.1 million ($137.9 million of which are from discontinued operations, for the properties and land and other impairments of $32.4 million.

The following table summarizes the real estate held for sale, net, and other assets and liabilities (dollars in thousands):

The Company disposed of the following rental properties during the year ended December 31, 2019 (dollars in thousands):

The Company disposed of the following developable land holdings during the year ended December 31, 2019 (dollars in thousands):

Impairments on Properties Held and Used

2020

The Company determined that, due to the shortening of its expected period of ownership and as a result of the adverse effect the COVID-19 pandemic has had, and continues to have, on its hotel operations, the Company evaluated the recoverability of the carrying values of its two adjacent hotel properties and determined that it was necessary to reduce the carrying values of its two hotel assets located in Weehawken, New Jersey to their estimated fair values.  One of these hotels has closed its rooms since March 2020. Accordingly, the Company recorded an impairment charge of $36.6 million on these hotels at September 30, 2020, which is included in property impairments on the consolidated statement of operations for the year ended December 31, 2020. The Company also evaluated the recoverability of the carrying values of its land parcels and determined that it was necessary to reduce the carrying values of three held-and-used land parcels to their estimated fair values and recorded land and other impairment charges of $7.3 million for the year ended