v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
ASC 820 defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities as well as certain U.S. Treasury securities that are highly liquid and are actively traded in secondary markets; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.
15.    Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheets), (ii) loans receivable (for which we have elected the fair value option under ASC Subtopic 825-10, Financial Instruments ("ASC 825-10")), (iii) interest rate swaps and caps and (iv) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy.
(Amounts in thousands)As of June 30, 2025
TotalLevel 1Level 2Level 3
Deferred compensation plan assets ($12,994 included in restricted cash and $91,771 in other assets)
$104,765 $66,944 $— $37,821 
Loans receivable ($32,984 included in investments in partially owned entities and $57,002 in other assets)
89,986 — — 89,986 
Interest rate swaps and caps designated as a hedge (included in other assets)36,115 — 36,115 — 
Interest rate caps not designated as a hedge (included in other assets)134 — 134 — 
Total assets$231,000 $66,944 $36,249 $127,807 
Mandatorily redeemable instruments (included in other liabilities)$49,610 $49,610 $— $— 
Interest rate swaps designated as a hedge (included in other liabilities)3,669 — 3,669 — 
Interest rate caps not designated as a hedge (included in other liabilities)134 — 134 — 
Total liabilities$53,413 $49,610 $3,803 $— 
(Amounts in thousands)As of December 31, 2024
TotalLevel 1Level 2Level 3
Deferred compensation plan assets ($8,958 included in restricted cash and $105,622 in other assets)
$114,580 $70,025 $— $44,555 
Loans receivable ($32,984 included in investments in partially owned entities and $52,335 in other assets)
85,319 — — 85,319 
Interest rate swaps and caps designated as a hedge (included in other assets)88,982 — 88,982 — 
Interest rate caps not designated as a hedge (included in other assets)1,040 — 1,040 — 
Total assets$289,921 $70,025 $90,022 $129,874 
Mandatorily redeemable instruments (included in other liabilities)$49,684 $49,684 $— $— 
Interest rate swaps designated as a hedge (included in other liabilities)1,023 — 1,023 — 
Interest rate caps not designated as a hedge (included in other liabilities)1,040 — 1,040 — 
Total liabilities$51,747 $49,684 $2,063 $— 
15.    Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Deferred Compensation Plan Assets
Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties. We receive quarterly financial reports that provide net asset values on a fair value basis from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund. The period of time over which these underlying assets are expected to be liquidated is unknown. The third-party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.
The table below summarizes the changes in the fair value of deferred compensation plan assets that are classified as Level 3.
(Amounts in thousands)For the Three Months Ended June 30, 2025For the Six Months Ended June 30, 2025
Beginning balance$44,099 $44,555 
Purchases496 496 
Sales(5,277)(6,001)
Realized and unrealized losses(2,394)(2,850)
Other, net897 1,621 
Ending balance$37,821 $37,821 
Loans Receivable
The table below summarizes the changes in fair value of loans receivable that are classified as Level 3.
(Amounts in thousands)For the Three Months Ended June 30, 2025For the Six Months Ended June 30, 2025
Beginning balance$87,692 $85,319 
Funding1,124 2,341 
Interest accrual 1,170 2,326 
Ending balance(1)
$89,986 $89,986 
____________________
(1)The fair value for $32,984 of the balance was determined by using a discounted cash flow model and Level 3 inputs, which include a terminal capitalization rate of 5.5% and a discount rate of 8.0% as of June 30, 2025. The terminal capitalization rate and discount rate disclosed reflect both the range and the weighted average. The fair value for the remaining balance at June 30, 2025 was based on comparable sales data.
15.    Fair Value Measurements - continued
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued
Derivatives and Hedging
We use derivative instruments principally to reduce our exposure to interest rate increases. We do not enter into or hold derivative instruments for speculative trading purposes. We recognize the fair values of all derivatives in "other assets" or "other liabilities" on our consolidated balance sheets. Changes in the fair value of our cash flow hedges are recognized in other comprehensive income until the hedged item is recognized in earnings. Reported net income and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of hedging instruments and hedged items, but will have no effect on cash flows. Cash payments and receipts related to our interest rate hedges are classified as operating activities and included within our disclosure of cash paid for interest on our consolidated statements of cash flows, consistent with the classification of the hedged interest payments.
The following table summarizes our consolidated hedging instruments, all of which hedge variable rate debt, as of June 30, 2025 and December 31, 2024.
(Amounts in thousands)As of June 30, 2025As of December 31, 2024
Notional AmountAll-In Swapped RateSwap/Cap Expiration DateFair Value AssetFair Value LiabilityFair Value AssetFair Value Liability
Interest rate swaps:
555 California Street mortgage loan:
In-place swap$840,000 
(1)
6.03%05/26$— $862 $765 $— 
Forward swap (effective 05/26)840,000 5.56%
(2)
05/28— 2,272 — — 
Unsecured term loan(3)
800,000 4.40%(4)5,958 — 13,494 — 
Unsecured revolving credit facility575,000 3.84%08/278,278 — 18,510 — 
One Park Avenue mortgage loan(3)(5)
500,000 3.95%07/276,886 — 15,243 — 
PENN 11 mortgage loan(6)
500,000 6.28%10/2588 6 17 282 
100 West 33rd Street mortgage loan480,000 5.26%06/27423 — 6,808 — 
888 Seventh Avenue mortgage loan200,000 
(7)
4.76%09/271,890 — 5,249 — 
4 Union Square South mortgage loan(3)
100,000 
(8)
4.37%07/271,110 — 2,735 — 
435 Seventh Avenue mortgage loan75,000 6.96%04/26— 529 — 741 
Interest rate caps:
1290 Avenue of the Americas mortgage loan950,000 (9)11/2511,469 — 25,673 — 
Various mortgage loans13 — 488 — 
$36,115 $3,669 $88,982 $1,023 
____________________
(1)Represents our 70.0% share of the $1.2 billion mortgage loan. In June 2025, we entered into the forward swap arrangement detailed above.
(2)Reflects the May 2026 increase in variable rate spread to S+230. The variable rate spread will further increase to S+255 in May 2027.
(3)Upon the repayment of the 770 Broadway mortgage loan (see Note 6 - 770 Broadway), the $700,000 corporate-level interest rate swap was reallocated and now hedges $500,000 of the One Park Avenue mortgage loan, $100,000 of the unsecured term loan and $100,000 of the 4 Union Square South mortgage loan. The December 31, 2024 fair value is presented based on the current period reallocation.
(4)Represents the aggregate fair value of various interest rate swap arrangements to hedge interest payments on our unsecured term loan, which matures in December 2027. The impact of these interest rate swap arrangements is detailed below:
Swapped BalanceAll-In Swapped Rate
Unswapped Balance
(bears interest at S+125)
Through 07/25$800,000 4.40%$— 
07/25 through 10/26650,000 4.24%150,000 
10/26 through 07/27150,000 3.90%650,000 
07/27 through 08/2750,000 3.99%750,000 

(5)The remaining $25,000 mortgage loan balance bears interest at a floating rate of SOFR plus 1.22% (5.53% as of June 30, 2025) and has a 4.39% SOFR strike rate cap in place.
(6)On July 16, 2025, we completed a $450,000 refinancing of PENN 11, extending the maturity date to August 2030 (See Note 20 - Subsequent Events).
(7)The remaining $49,824 mortgage loan balance bears interest at a floating rate of SOFR plus 1.80% (6.12% as of June 30, 2025).
(8)The remaining $20,000 mortgage loan balance bears interest at a floating rate of SOFR plus 1.50% (5.82% as of June 30, 2025).
(9)SOFR cap strike rate of 1.00%.
15.    Fair Value Measurements - continued
Fair Value Measurements on a Nonrecurring Basis
There were no assets measured at fair value on a nonrecurring basis on our consolidated balance sheets as of June 30, 2025 and December 31, 2024.
Financial Assets and Liabilities not Measured at Fair Value
Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily money market funds, which invest in obligations of the United States government) and our secured and unsecured debt. The fair values of these instruments are estimated using discounted cash flow analyses provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. The fair value of cash equivalents and borrowings under our unsecured revolving credit facilities and unsecured term loan are classified as Level 1. The fair value of our secured debt and unsecured debt are classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments.
(Amounts in thousands)As of June 30, 2025As of December 31, 2024
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Cash equivalents$992,520 $993,000 $639,366 $639,000 
Debt:
Mortgages payable$4,998,943 $4,812,000 $5,707,176 $5,486,000 
Senior unsecured notes750,000 701,000 1,200,000 1,129,000 
Unsecured term loan800,000 800,000 800,000 800,000 
Unsecured revolving credit facilities575,000 575,000 575,000 575,000 
Total$7,123,943 
(1)
$6,888,000 $8,282,176 
(1)
$7,990,000 
____________________
(1)Excludes $28,186 and $39,300 of deferred financing costs, net and other as of June 30, 2025 and December 31, 2024, respectively.