SL Green Realty Corp.
RECKSON OPERATING PARTNERSHIP LP (Form: 10-Q, Received: 11/14/2016 08:29:40)
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________  
FORM 10-Q
_________________________________________________________ 
 
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
For the quarterly period ended September 30, 2016
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
For the transition period from                to              
 
Commission File Number: 033-84580  
_________________________________________________________ 
RECKSON OPERATING PARTNERSHIP, L.P.
(Exact name of registrant as specified in its charter)
_________________________________________________________  
Delaware
11-3233647
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
420 Lexington Avenue, New York, New York 10170
(Address of principal executive offices) (Zip Code)

(212) 594-2700
(Registrant’s telephone number, including area code)
 _________________________________________________________
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES ý      NO o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ý     NO o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer o
 
 
Non-accelerated filer x
Smaller Reporting Company o
(Do not check if a smaller reporting company)
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o   NO ý
 
As of November 14, 2016 , no common units of limited partnership interest of the Registrant were held by non-affiliates of the Registrant.  There is no established trading market for such units.
 




Reckson Operating Partnership, L.P.
TABLE OF CONTENTS

 
 
 
Consolidated Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015
 
Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (unaudited)
 
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015 (unaudited)
 
Consolidated Statement of Capital for the nine months ended September 30, 2016 (unaudited)
 
Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (unaudited)
 
 
 


1

Table of Contents

PART I. FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS
Reckson Operating Partnership, L.P.
Consolidated Balance Sheets
(in thousands)
 
September 30, 2016
 
December 31, 2015
 
(unaudited)
 
 
Assets
 
 
 
Commercial real estate properties, at cost:
 
 
 
Land and land interests
$
1,806,919

 
$
1,877,492

Building and improvements
4,592,396

 
4,477,073

Building leasehold and improvements
1,073,678

 
1,073,678

 
7,472,993

 
7,428,243

Less: accumulated depreciation
(1,395,371
)
 
(1,267,598
)
 
6,077,622

 
6,160,645

Cash and cash equivalents
66,196

 
50,026

Restricted cash
42,673

 
39,433

Tenant and other receivables, net of allowance of $5,423 and $5,593 in 2016 and 2015, respectively
32,622

 
35,256

Related party receivables

 
90,000

Deferred rents receivable, net of allowance of $17,046 and $14,788 in 2016 and 2015, respectively
231,464

 
217,730

Debt and preferred equity investments, net of discounts and deferred origination fees of $14,631 and $18,759 in 2016 and 2015, respectively
1,453,234

 
1,670,020

Investments in unconsolidated joint ventures
173,010

 
100,192

Deferred costs, net of accumulated amortization of $74,736 and $64,812 in 2016 and 2015, respectively
121,890

 
114,449

Other assets
417,922

 
355,566

Total assets
$
8,616,633

 
$
8,833,317

Liabilities
 
 
 
Mortgages and other loans payable, net
$
626,139

 
$
745,728

Revolving credit facility, net

 
985,055

Term loan and senior unsecured notes, net
1,974,124

 
1,979,317

Accrued interest payable
10,968

 
18,396

Other liabilities
164,509

 
116,088

Accounts payable and accrued expenses
60,113

 
70,844

Related party payables
23,808

 

Deferred revenue
176,586

 
180,404

Deferred land leases payable
1,772

 
1,558

Dividends payable
754

 
807

Security deposits
40,009

 
39,007

Total liabilities
3,078,782

 
4,137,204

Commitments and contingencies

 

Preferred units
109,161

 
109,161

Capital
 
 
 
General partner capital
5,040,392

 
4,201,872

Limited partner capital

 

Accumulated other comprehensive loss
(1,708
)
 
(2,216
)
Total ROP partner's capital
5,038,684

 
4,199,656

Noncontrolling interests in other partnerships
390,006

 
387,296

Total capital
5,428,690

 
4,586,952

Total liabilities and capital
$
8,616,633

 
$
8,833,317

The accompanying notes are an integral part of these consolidated financial statements.

2

Table of Contents

Reckson Operating Partnership, L.P.
Consolidated Statements of Operations
(unaudited, in thousands)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
 
Rental revenue, net
 
$
166,456

 
$
159,381

 
$
486,350

 
$
461,858

Escalation and reimbursement
 
28,158

 
25,870

 
78,173

 
72,080

Investment income
 
75,715

 
49,660

 
175,481

 
136,620

Other income
 
1,007

 
2,740

 
2,754

 
16,392

Total revenues
 
271,336

 
237,651


742,758

 
686,950

Expenses
 
 
 
 
 
 
 
 
Operating expenses, including related party expenses of $1,169 and $5,752 in 2016 and $2,605 and $6,530 in 2015
 
43,549

 
41,397

 
124,319

 
122,567

Real estate taxes
 
38,900

 
37,448

 
113,426

 
107,152

Ground rent
 
5,266

 
5,236

 
15,736

 
15,706

Interest expense, net of interest income
 
24,723

 
31,132

 
83,367

 
86,856

Amortization of deferred financing costs
 
2,081

 
2,418

 
5,953

 
5,674

Depreciation and amortization
 
57,916

 
51,490

 
159,365

 
151,159

Transaction related costs
 
98

 
2,887

 
343

 
2,842

Marketing, general and administrative
 
156

 
102

 
605

 
366

Total expenses
 
172,689

 
172,110

 
503,114

 
492,322

Income from continuing operations before equity in net income from unconsolidated joint ventures, gain (loss) on sale of real estate, depreciable real estate reserve, unrealized loss on embedded derivatives and loss on early extinguishment of debt
 
98,647

 
65,541

 
239,644

 
194,628

Equity in net income from unconsolidated joint ventures
 
4,276

 
2,296

 
10,399

 
6,576

Gain (loss) on sale of real estate
 

 
101,069

 
(6,899
)
 
101,069

Depreciable real estate reserves
 

 
(9,998
)
 

 
(9,998
)
Unrealized loss on embedded derivative
 

 
(1,800
)
 

 
(1,800
)
Loss on early extinguishment of debt
 

 

 

 
(49
)
Income from continuing operations
 
102,923

 
157,108

 
243,144

 
290,426

Net income from discontinued operations
 

 

 

 

Net income
 
102,923

 
157,108

 
243,144

 
290,426

Net income attributable to noncontrolling interests in other partnerships
 
(1,279
)
 
(293
)
 
(3,353
)
 
(7,223
)
Preferred units dividend
 
(955
)
 
(743
)
 
(2,865
)
 
(743
)
Net income attributable to ROP common unitholder
 
$
100,689

 
$
156,072

 
$
236,926

 
$
282,460



The accompanying notes are an integral part of these consolidated financial statements.

3

Table of Contents

Reckson Operating Partnership, L.P.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Net income attributable to ROP common unitholder
$
100,689

 
$
156,072

 
$
236,926

 
$
282,460

Other comprehensive income:
 
 
 
 
 
 
 
Change in net unrealized gain on derivative instruments
90

 
222

 
508

 
626

Comprehensive income attributable to ROP common unitholder
$
100,779

 
$
156,294


$
237,434


$
283,086



The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents

Reckson Operating Partnership, L.P.
Consolidated Statement of Capital
(unaudited, in thousands)
 
General
Partner's
Capital
Class A
Common
Units
 
Limited Partner's Capital
 
Noncontrolling
Interests
In Other
Partnerships
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Total
Capital
Balance at December 31, 2015
$
4,201,872

 
$

 
$
387,296

 
$
(2,216
)
 
$
4,586,952

Contributions
4,023,919

 

 

 

 
4,023,919

Distributions
(3,422,325
)
 

 
(643
)
 

 
(3,422,968
)
Net income
236,926

 

 
3,353

 

 
240,279

Other comprehensive income

 

 

 
508

 
508

Balance at September 30, 2016
$
5,040,392

 
$

 
$
390,006

 
$
(1,708
)
 
$
5,428,690



The accompanying notes are an integral part of these consolidated financial statements.


5

Table of Contents
Reckson Operating Partnership, L.P.
Consolidated Statements of Cash Flows
(unaudited, in thousands)

 
Nine Months Ended September 30,
 
2016
 
2015
Operating Activities
 
 
 
Net income
$
243,144

 
$
290,426

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
165,318

 
156,833

Equity in net income from unconsolidated joint venture
(10,399
)
 
(6,576
)
Distributions of cumulative earnings from unconsolidated joint ventures
7,286

 
6,435

Loss (gain) on sale of real estate
6,899

 
(101,069
)
Loss on early extinguishment of debt

 
49

Depreciable real estate reserve

 
9,998

Deferred rents receivable
(15,992
)
 
(14,613
)
Other non-cash adjustments
(38,249
)
 
(53,453
)
Changes in operating assets and liabilities:
 
 
 
Restricted cash—operations
(10,365
)
 
(987
)
Tenant and other receivables
2

 
(10,246
)
Deferred lease costs
(22,447
)
 
(31,986
)
Other assets
(26,934
)
 
(26,514
)
Accounts payable, accrued expenses and other liabilities
(4,736
)
 
8,561

Deferred revenue and land leases payable
9,956

 
9,567

Net cash provided by operating activities
303,483

 
236,425

Investing Activities
 
 
 
Acquisitions of real estate properties

 
(109,633
)
Additions to land, buildings and improvements
(82,895
)
 
(58,374
)
Escrowed cash—capital improvements
368

 
388

Investments in unconsolidated joint venture
(24,961
)
 
(988
)
Distributions in excess of cumulative earnings from unconsolidated joint ventures
1,028

 
28,158

Net proceeds from disposition of real estate/joint venture interest
42,316

 
216,592

Other investments
16,066

 
(7,177
)
Origination of debt and preferred equity investments
(555,089
)
 
(461,257
)
Repayments or redemption of preferred equity investments
667,251

 
372,084

Net cash provided by (used in) investing activities
64,084

 
(20,207
)
Financing Activities
 
 
 
Proceeds from mortgages and other loans payable
$
383

 
$
300,018

Repayments of mortgages and other loans payable
(119,165
)
 
(234,510
)
Proceeds from credit facility and senior unsecured notes
1,260,300

 
2,130,000

Repayments of credit facility and senior unsecured notes
(2,259,608
)
 
(1,466,007
)
Distributions to noncontrolling interests in other partnerships
(643
)
 
(1,280
)
Contributions from noncontrolling interests in other partnerships

 
9,400

Contributions from common unitholder
4,137,727

 
2,338,277

Distributions to common and preferred unitholders
(3,425,243
)
 
(3,297,066
)
Other obligations related to loan participations
59,150

 
25,000

Deferred loan costs and capitalized lease obligation
(4,298
)
 
(9,025
)
Net cash used in financing activities
(351,397
)
 
(205,193
)
Net increase in cash and cash equivalents
16,170

 
11,025

Cash and cash equivalents at beginning of period
50,026

 
34,691

Cash and cash equivalents at end of period
$
66,196

 
$
45,716

 
 
 
 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
 
 
 
Tenant improvements and capital expenditures payable
$
8,973

 
$
5,160

Deferred leasing payable
2,949

 
7,668

Change in fair value of hedge
208

 
13,909

Transfer to assets held for sale

 
22,494

Transfer to liabilities related to assets held for sale

 
94

Deconsolidation of a subsidiary

 
27,435

Issuance of SL Green common stock to a consolidated joint venture

 
10,000

Contribution of notes receivable from the common unit holder

 
90,000

Issuance of preferred units through a subsidiary

 
109,161

Contributions from a noncontrolling interest in other partnerships

 
22,278

Exchange of debt investment for equity in joint venture
68,581

 

Removal of fully depreciated commercial real estate properties
8,516

 

Settlement of related party receivable with SL Green common stock
90,000

 

Issuance of related party payable for SL Green common stock
23,808

 



The accompanying notes are an integral part of these consolidated financial statements.

6

Table of Contents

Reckson Operating Partnership, L.P.
Notes to Consolidated Financial Statements
September 30, 2016
(unaudited)
1. Organization and Basis of Presentation
Reckson Operating Partnership, L.P., or ROP, commenced operations on June 2, 1995. The sole general partner of ROP is Wyoming Acquisition GP LLC., or WAGP, a wholly-owned subsidiary of SL Green Operating Partnership, L.P., or the Operating Partnership. The sole limited partner of ROP is the Operating Partnership. The Operating Partnership is 95.71%  owned by SL Green Realty Corp., or SL Green, as of September 30, 2016 . SL Green is a self-administered and self-managed real estate investment trust, and is the sole managing general partner of the Operating Partnership. Unless the context requires otherwise, all references to "we," "our," "us" and the "Company" means ROP and all entities owned or controlled by ROP.
ROP is engaged in the acquisition, ownership, management and operation of commercial and residential real estate properties, principally office properties, and also owns land for future development, located in New York City, Westchester County, Connecticut and New Jersey, which collectively is also known as the New York Metropolitan area.
In 2015, SL Green transferred two properties and SL Green's tenancy in common interest in a fee interest with a total value of $395.0 million to ROP. Additionally, in 2015, SL Green transferred one entity that held debt investments and financing receivables with an aggregate carrying value of $1.7 billion to ROP. These transfers were made to further diversify ROP's portfolio. Under the business combinations guidance (Accounting Standard Codification, or ASC, 805-50), these transfers were determined to be transfers of businesses between the indirect parent company and its wholly-owned subsidiary. As such, the assets and liabilities of the properties were transferred at their carrying values and were recorded as of the beginning of the current reporting period as though the assets and liabilities had been transferred at that date. The financial statements and financial information presented for all prior periods have been retrospectively adjusted to furnish comparative information.
As of September 30, 2016 , we owned the following interests in properties in the New York Metropolitan area, primarily in midtown Manhattan. Our investments in the New York Metropolitan area also include investments in Brooklyn, Westchester County, Connecticut and New Jersey, which are collectively known as the Suburban properties:
Location
 
Type
 
Number of
Properties
 
Approximate Square Feet (unaudited)
 
Weighted Average
Occupancy
(1)  (unaudited)
Commercial:
 
 
 
 
 
 
 
 
Manhattan
 
Office
 
16

 
8,463,245

 
96.6
%
 
 
Retail (2)(3)
 
5

 
352,892

 
97.6
%
 
 
Fee Interest
 
2

 
197,654

 
100.0
%
 
 
 
 
23

 
9,013,791

 
96.7
%
Suburban
 
Office
 
19

 
3,287,800

 
82.6
%
 
 
Retail
 
1

 
52,000

 
100.0
%
 
 
 
 
20

 
3,339,800

 
82.9
%
Total commercial properties
 
 
 
43

 
12,353,591

 
93.0
%
Residential:
 
 
 
 
 
 
 
 
Manhattan
 
Residential (2)
 

 
222,855

 
94.0
%
Total portfolio
 
 
 
43

 
12,576,446

 
93.0
%

(1)
The weighted average occupancy for commercial properties represents the total leased square feet divided by total acquisition square footage. The weighted average occupancy for residential properties represents the total occupied units divided by total available units.
(2)
As of September 30, 2016 , we owned a building that was comprised of approximately 270,132 square feet of retail space and approximately 222,855 square feet of residential space. For the purpose of this report, we have included the building in the retail properties count and have bifurcated the square footage into the retail and residential components.
(3)
Includes two unconsolidated joint venture retail properties at 131-137 Spring Street comprised of approximately 68,342 square feet.

As of September 30, 2016 , we held debt and preferred equity investments with a book value of $1.8 billion , including $0.3 billion of debt and preferred equity investments and other financing receivables that are included in other balance sheet line items.
Basis of Quarterly Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally

7

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the financial position of the Company at September 30, 2016 and the results of operations for the periods presented have been included. The operating results for the period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . These financial statements should be read in conjunction with the financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2015 .
The consolidated balance sheet at December 31, 2015 has been derived from the audited financial statements as of that date but do not include all the information and footnotes required by accounting principals generally accepted in the United States for complete financial statements.
2. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include our accounts and those of our subsidiaries, which are wholly-owned or controlled by us. Entities which we do not control through our voting interest and entities which are variable interest entities, but where we are not the primary beneficiary, are accounted for under the equity method. See Note 5, "Debt and Preferred Equity Investments." ROP's investments in majority-owned and controlled real estate joint ventures are reflected in the financial statements on a consolidated basis with a reduction for the noncontrolling partners' interests. All significant intercompany balances and transactions have been eliminated.
We consolidate a variable interest entity, or VIE, in which we are considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Included in commercial real estate properties on our consolidated balance sheets as of September 30, 2016 and December 31, 2015 are $1.4 billion and $0.3 billion , respectively, related to our consolidated VIEs. Included in mortgages and other loans payable on our consolidated balance sheets as of September 30, 2016 and December 31, 2015 are $493.8 million and none , respectively, collateralized by the real estate assets of the related consolidated VIEs.
A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to us. Noncontrolling interests are required to be presented as a separate component of capital in the consolidated balance sheet and the presentation of net income is modified to present earnings and other comprehensive income attributed to controlling and noncontrolling interests.
We assess the accounting treatment for each joint venture and debt and preferred equity investment. This assessment includes a review of each joint venture or limited liability company agreement to determine which party has what rights and whether those rights are protective or participating. For all VIEs, we review such agreements in order to determine which party has the power to direct the activities that most significantly impact the entity's economic performance. In situations where we and our partner approve, among other things, the annual budget, receive a detailed monthly reporting package, meet on a quarterly basis to review the results of the joint venture, review and approve the joint venture's tax return before filing, and approve all leases that cover more than a nominal amount of space relative to the total rentable space at each property, we do not consolidate the joint venture as we consider these to be substantive participation rights that result in shared power of the activities that most significantly impact the performance of the joint venture. Our joint venture agreements typically contain certain protective rights such as requiring partner approval to sell, finance or refinance the property and the payment of capital expenditures and operating expenditures outside of the approved budget or operating plan.
Investment in Commercial Real Estate Properties
On a periodic basis, we assess whether there are any indications that the value of our real estate properties may be other than temporarily impaired or that their carrying value may not be recoverable. A property's value is considered impaired if management's estimate of the aggregate future cash flows (undiscounted) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss will be measured as the excess of the carrying amount of the property over the calculated fair value of the property.
We also evaluate our real estate properties for potential impairment when a real estate property has been classified as held for sale. Real estate assets held for sale are valued at the lower of either their carrying value or fair value less costs to sell. We do not believe that there were any indicators of impairment at any of our consolidated properties at September 30, 2016 .
We allocate the purchase price of real estate to land and building (inclusive of tenant improvements) and, if determined to be material, intangibles, such as the value of the above- and below-market leases and origination costs associated with the in-place

8

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

leases. We depreciate the amount allocated to building (inclusive of tenant improvements) over their estimated useful lives, which generally range from three to 40 years . We amortize the amount allocated to the above- and below-market leases over the remaining term of the associated lease, which generally range from one to 14 years , and record it as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental income. We amortize the amount allocated to the values associated with in-place leases over the expected term of the associated lease, which generally ranges from one to 14 years . If a tenant vacates its space prior to the contractual termination of the lease and no rental payments are being made on the lease, any unamortized balance of the related intangible will be written off. The tenant improvements and origination costs are amortized as an expense over the remaining life of the lease (or charged against earnings if the lease is terminated prior to its contractual expiration date). We assess fair value of the leases based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. To the extent acquired leases contain fixed rate renewal options that are below-market and determined to be material, we amortize such below-market lease value into rental income over the renewal period.
We recognized an increase of $8.1 million and $15.9 million in rental revenue for the three and nine months ended September 30, 2016 , respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase price of the applicable properties. We recognized an increase of $8.3 million , and $20.9 million in rental revenue for the three and nine months ended September 30, 2015 , respectively, for the amortization of aggregate below-market leases in excess of above-market leases and a reduction in lease origination costs, resulting from the allocation of the purchase price of the applicable properties.
The following summarizes our identified intangible assets (acquired above-market leases and in-place leases) and intangible liabilities (acquired below-market leases) as of September 30, 2016 and December 31, 2015 (in thousands):
 
September 30, 2016
 
December 31, 2015
Identified intangible assets (included in other assets):
 
 
 
Gross amount
$
311,830

 
$
307,824

Accumulated amortization
(248,463
)
 
(235,040
)
Net
$
63,367

 
$
72,784

Identified intangible liabilities (included in deferred revenue):
 
 
 
Gross amount
$
524,793

 
$
523,228

Accumulated amortization
(362,197
)
 
(346,857
)
Net
$
162,596

 
$
176,371

Fair Value Measurements
See Note 12, "Fair Value Measurements."
Investments in Unconsolidated Joint Ventures
We assess our investments in unconsolidated joint ventures for recoverability, and if it is determined that a loss in value of the investment is other than temporary, we write down the investment to its fair value. We evaluate our equity investments for impairment based on the joint ventures' projected discounted cash flows. We do not believe that the values of any of our equity investments were impaired at September 30, 2016 .
We may originate loans for real estate acquisition, development and construction, where we expect to receive some or all of the residual profit from such projects. When the risk and rewards of these arrangements are essentially the same as an investor or joint venture partner, we account for these arrangements as real estate investments under the equity method of accounting for investments. Otherwise, we account for these arrangements consistent with our loan accounting for our debt and preferred equity investments.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over the term of the lease. Rental revenue recognition commences when the tenant takes possession or controls the physical use of the leased space. In order for the tenant to take possession, the leased space must be substantially ready for its intended use. To determine whether the leased space is substantially ready for its intended use, management evaluates whether we are or the tenant is the owner of tenant improvements for accounting purposes. When management concludes that we are the owner of tenant improvements, rental revenue recognition begins when the tenant takes

9

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

possession of the finished space, which is when such tenant improvements are substantially complete. In certain instances, when management concludes that we are not the owner (the tenant is the owner) of tenant improvements, rental revenue recognition begins when the tenant takes possession of or controls the space. When management concludes that we are the owner of tenant improvements for accounting purposes, we record amounts funded to construct the tenant improvements as a capital asset. For these tenant improvements, we record amounts reimbursed by tenants as a reduction of the capital asset. When management concludes that the tenant is the owner of tenant improvements for accounting purposes, we record our contribution towards those improvements as a lease incentive, which is included in deferred costs, net on our consolidated balance sheets and amortized as a reduction to rental revenue on a straight-line basis over the term of the lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases are included in deferred rents receivable on the consolidated balance sheets. We establish, on a current basis, an allowance for future potential tenant credit losses, which may occur against this account. The balance reflected on the consolidated balance sheets is net of such allowance.
In addition to base rent, our tenants also generally will pay their pro rata share of increases in real estate taxes and operating expenses for the building over a base year. In some leases, in lieu of paying additional rent based upon increases in building operating expenses, the tenant will pay additional rent based upon increases in the wage rate paid to porters over the porters' wage rate in effect during a base year or increases in the consumer price index over the index value in effect during a base year. In addition, many of our leases contain fixed percentage increases over the base rent to cover escalations. Electricity is most often supplied by the landlord either on a sub-metered basis, or rent inclusion basis (i.e., a fixed fee is included in the rent for electricity, which amount may increase based upon increases in electricity rates or increases in electrical usage by the tenant). Base building services other than electricity (such as heat, air conditioning and freight elevator service during business hours, and base building cleaning) are typically provided at no additional cost, with the tenant paying additional rent only for services which exceed base building services or for services which are provided outside normal business hours. These escalations are based on actual expenses incurred in the prior calendar year. If the expenses in the current year are different from those in the prior year, then during the current year, the escalations will be adjusted to reflect the actual expenses for the current year.
We record a gain on sale of real estate when title is conveyed to the buyer, subject to the buyer's financial commitment being sufficient to provide economic substance to the sale and provided that we have no substantial economic involvement with the buyer.
Interest income on debt and preferred equity investments is accrued based on the contractual terms of the instruments and when, in the opinion of management, it is deemed collectible. Some debt and preferred equity investments provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management's determination that accrued interest is ultimately collectible, based on the underlying collateral and operations of the borrower. If management cannot make this determination, interest income above the current pay rate is recognized only upon actual receipt.
Deferred origination fees, original issue discounts and loan origination costs, if any, are recognized as an adjustment to the interest income over the terms of the related investments using the effective interest method. Fees received in connection with loan commitments are also deferred until the loan is funded and are then recognized over the term of the loan as an adjustment to yield. Discounts or premiums associated with the purchase of loans are amortized or accreted into interest income as a yield adjustment on the effective interest method based on expected cashflows through the expected maturity date of the related investment. If we purchase a debt or preferred equity investment at a discount, intend to hold it until maturity and expect to recover the full value of the investment, we accrete the discount into income as an adjustment to yield over the term of the investment. If we purchase a debt or preferred equity investment at a discount with the intention of foreclosing on the collateral, we do not accrete the discount. For debt investments acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted. Anticipated exit fees, the collection of which is expected, are also recognized over the term of the loan as an adjustment to yield.
Debt and preferred equity investments are placed on a non-accrual status at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of interest income becomes doubtful. Interest income recognition on any non-accrual debt or preferred equity investment is resumed when such non-accrual debt or preferred equity investment becomes contractually current and performance is demonstrated to be resumed. Interest is recorded as income on impaired loans only to the extent cash is received.
We may syndicate a portion of the loans that we originate or sell the loans individually. When a transaction meets the criteria for sale accounting, we derecognize the loan sold and recognize gain or loss based on the difference between the sales price and the carrying value of the loan sold. Any related unamortized deferred origination fees, original issue discounts, loan origination costs, discounts or premiums at the time of sale are recognized as an adjustment to the gain or loss on sale, which is included in

10

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

investment income on the consolidated statement of operations. Any fees received at the time of sale or syndication are recognized as part of investment income.
Reserve for Possible Credit Losses
The expense for possible credit losses in connection with debt and preferred equity investments is the charge to earnings to increase the allowance for possible credit losses to the level that we estimate to be adequate, based on Level 3 data, considering delinquencies, loss experience and collateral quality. Other factors considered include geographic trends, product diversification, the size of the portfolio and current economic conditions. Based upon these factors, we establish a provision for possible credit losses on each individual investment. When it is probable that we will be unable to collect all amounts contractually due, the investment is considered impaired.
Where impairment is indicated on an investment that is held to maturity, a valuation allowance is measured based upon the excess of the recorded investment amount over the net fair value of the collateral. Any deficiency between the carrying amount of an asset and the calculated value of the collateral is charged to expense. We continue to assess or adjust our estimates based on circumstances of a loan and the underlying collateral. If the additional information obtained reflects increased recovery of our investment, we will adjust our reserves accordingly. There were no loan reserves recorded during the three and nine months ended September 30, 2016 and 2015.
Debt and preferred equity investments held for sale are carried at the lower of cost or fair market value using available market information obtained through consultation with dealers or other originators of such investments as well as discounted cash flow models based on Level 3 data pursuant to ASC 820-10. As circumstances change, management may conclude not to sell an investment designated as held for sale. In such situations, the investment will be reclassified at its net carrying value to debt and preferred equity investments held to maturity. For these reclassified investments, the difference between the current carrying value and the expected cash to be collected at maturity will be accreted into income over the remaining term of the investment.
Income Taxes
ROP is a partnership and, as a result, all income and losses of the partnership are allocated to the partners for inclusion in their respective income tax returns. No provision has been made for income taxes in the consolidated financial statements since such taxes, if any, are the responsibility of the individual partners.
Shares Contributed by Parent Company
We present shares of SL Green common stock as a contra equity account in our financial statements.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash investments, debt and preferred equity investments and accounts receivable. We place our cash investments in excess of insured amounts with high quality financial institutions. The collateral securing our debt and preferred equity investments is located in New York City. See Note 5, "Debt and Preferred Equity Investments." We perform ongoing credit evaluations of our tenants and require most tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the total value of a tenant's lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting a space. Although the properties in our real estate portfolio are primarily located in Manhattan, we also have properties located in Brooklyn, Westchester County, Connecticut and New Jersey. The tenants located in our buildings operate in various industries. No tenant in the portfolio accounted for more than 5.0% of our share of annualized cash rent, including our share of joint venture annualized cash rent, at September 30, 2016 . For the three months ended September 30, 2016 , 13.3% , 12.6% , 8.2% , 6.5% , 6.3% , 5.9% , 5.7% and 5.7% of our share of annualized cash rent was attributable to 919 Third Avenue, 1185 Avenue of the Americas, 625 Madison Avenue, 750 Third Avenue, 810 Seventh Avenue, 1350 Avenue of the Americas, 555 West 57 th Street and 125 Park Avenue respectively. Annualized cash rent for all other consolidated properties was below 5.0%.
Reclassification
Certain prior year balances have been reclassified to conform to our current year presentation.

11

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

Accounting Standards Updates
In August 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The ASU provides final guidance on eight cash flow issues, including debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, distributions received from equity method investees, separately identifiable cash flows and application of the predominance principle, and others. The amendments in the ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The guidance changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The guidance replaces the current ‘incurred loss’ model with an ‘expected loss’ approach. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted after December 2018. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In March 2016, the FASB issued ASU 2016-07, Investments Equity Method and Joint Ventures (Topic 323). The guidance eliminates the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The guidance is effective for all entities for fiscal years beginning after 15 December 2016 and interim periods within those years. Early adoption is permitted in any interim or annual period. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases. The guidance requires lessees to recognize lease assets and lease liabilities for those leases classified as operating leases under the previous standard. The accounting applied by a lessor is largely unchanged from that applied under the previous standard. The Guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01 (ASU825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and to record changes in instruments-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. The guidance is effective for fiscal years beginning after December 15, 2017, and for interim periods therein. The Company has not yet adopted this new guidance and is currently evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.
In April 2015, the FASB issued final guidance to simplify the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability (ASU 2015-03). The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The Company adopted the guidance effective January 1, 2016. Accordingly, as of September 30, 2016 and December 31, 2015, $24.1 million and $25.4 million , respectively of deferred debt issuance costs, net of amortization are presented as a direct reduction within Mortgages and other loans payable, Revolving credit facility, Term loan and senior unsecured notes on the Company's consolidated balance sheets.
In February 2015, the FASB issued guidance that amends the current consolidation guidance, including introducing a separate consolidation analysis specific to limited partnerships and other similar entities (ASU 2015-02). Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. The Company adopted the guidance effective January 1, 2016. Under the revised guidance, certain entities, including the Operating Partnership, now qualify as variable interest entities while some of our entities originally classified as variable interest entities no longer meet the criteria.  The change in designation did not have a material impact on our consolidated financial statements and did not change the consolidation conclusion on these entities.

12

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

In May 2014, the FASB issued a new comprehensive revenue recognition guidance which requires us to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services (ASU 2014-09). The guidance also requires enhanced disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized.
In March 2016, the FASB issued implementation guidance which clarifies principal versus agent considerations in reporting revenue gross versus net (ASU 2016-08).
In April 2016, the FASB issued implementation guidance which clarifies the identification of performance obligations (ASU 2016-10).
In April 2016, the FASB amended its new revenue recognition guidance on identifying performance obligations to allow entities to disregard items that are immaterial and clarify when a good or service is separately identifiable (ASU 2016-10).
In May 2016, the FASB issued implementation guidance relating to transition, collectability, noncash consideration and presentation matters (ASU 2016-12).
These ASUs are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. The new guidance can be applied either retrospectively to each prior reporting period presented, or as a cumulative-effect adjustment as of the date of adoption. The Company has not yet adopted this guidance and is currently evaluating the new guidance to determine the impact it may have on our consolidated financial statements.
3. Property Acquisition
We did not acquire any properties during the three or nine months ended September 30, 2016 .
4. Property Disposition
Property Dispositions
The following table summarizes the properties sold during the nine months ended September 30, 2016 :
Property
 
Disposition Date
 
Property Type
 
Approximate Square Feet
 
Sales Price (1)
(in millions)
 
Loss on Sale
(in millions)
7 International Drive
 
May 2016
 
Land
 
31 Acres
 
20.0

 
(6.9
)

(1)
Sales price represents the gross sales price for a property or the gross asset valuation for interests in a property.
5. Debt and Preferred Equity Investments
During the nine months ended September 30, 2016 and 2015, our debt and preferred equity investments, net of discounts and deferred origination fees, increased $590.4 million and $464.9 million , respectively, due to originations, purchases, advances under future funding obligations, discount and fee amortization, and paid-in-kind interest, net of premium amortization. We recorded repayments, participations and sales of $807.2 million and $372.1 million during the nine months ended September 30, 2016 and 2015, respectively, which offset the increases in debt and preferred equity investments.
Certain debt investments that were participated out but did not meet the conditions for sale accounting are included in other assets and other liabilities on the consolidated balance sheets.
Debt Investments
As of September 30, 2016 and December 31, 2015 , we held the following debt investments, with an aggregate weighted average current yield of 9.29% at September 30, 2016 (in thousands):
Loan Type
 
September 30, 2016
Future Funding
Obligations
 
September 30, 2016 Senior
Financing
 
September 30, 2016
Carrying Value (1)
 
December 31, 2015
Carrying Value (1)
 
Maturity
Date (2)
Fixed Rate Investments:
 
 
 
 
 
 
 
 
 
 
Jr. Mortgage Participation/Mezzanine Loan
 
$

 
$
1,109,000

 
$
189,250

 
$
104,661

 
March 2017
Mezzanine Loan (3a)
 
5,000

 
502,100

 
61,059

 
41,115

 
June 2017
Mortgage Loan (4)
 

 

 
26,297

 
26,262

 
February 2019
Mortgage Loan
 

 

 
414

 
513

 
August 2019

13

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

Loan Type
 
September 30, 2016
Future Funding
Obligations
 
September 30, 2016 Senior
Financing
 
September 30, 2016
Carrying Value (1)
 
December 31, 2015
Carrying Value (1)
 
Maturity
Date (2)
Mezzanine Loan
 

 
15,000

 
3,500

 
3,500

 
September 2021
Mezzanine Loan (3b)
 

 
88,944

 
12,691

 
19,936

 
November 2023
Mezzanine Loan (3c)
 

 
115,000

 
12,923

 
24,916

 
June 2024
Mezzanine Loan
 

 
95,000

 
30,000

 
30,000

 
January 2025
Mezzanine Loan (5)
 

 

 

 
72,102

 
 
Mezzanine Loan (6)
 

 

 

 
49,691

 
 
Jr. Mortgage Participation (7)
 

 

 

 
49,000

 
 
Other (7)(8)
 

 

 

 
23,510

 
 
Other (7)(8)
 

 

 

 
66,183

 
 
Total fixed rate
 
$
5,000

 
$
1,925,044

 
$
336,134

 
$
511,389

 
 
Floating Rate Investments:
 
 
 
 
 
 
 
 
 
 
Mezzanine Loan
 

 
360,000

 
99,945

 
99,530

 
November 2016
Mezzanine Loan
 
7,939

 
144,008

 
53,405

 
49,751

 
December 2016
Mezzanine Loan
 
281

 
39,201

 
11,024

 
13,731

 
December 2016
Mortgage/Mezzanine Loan (3d)
 
40,086

 

 
140,920

 
134,264

 
January 2017
Mezzanine Loan
 
1,127

 
118,949

 
28,834

 
28,551

 
January 2017
Mezzanine Loan (3e)(9)
 

 
40,000

 
15,290

 
68,977

 
June 2017
Mortgage/Mezzanine Loan
 

 

 
32,763

 

 
June 2017
Mortgage/Mezzanine Loan
 

 

 
22,939

 
22,877

 
July 2017
Mortgage/Mezzanine Loan
 

 

 
16,946

 
16,901

 
September 2017
Mortgage/Mezzanine Loan
 
4,038

 

 
19,834

 
19,282

 
October 2017
Mezzanine Loan
 

 
60,000

 
14,944

 
14,904

 
November 2017
Mezzanine Loan (3f)
 

 
85,000

 
15,075

 
29,505

 
December 2017
Mezzanine Loan (3g)
 

 
65,000

 
14,598

 
28,563

 
December 2017
Mortgage/Mezzanine Loan (3h)
 
795

 

 
15,024

 
14,942

 
December 2017
Jr. Mortgage Participation
 

 
40,000

 
19,896

 
19,846

 
April 2018
Mezzanine Loan
 

 
175,000

 
34,814

 
34,725

 
April 2018
Mortgage/Mezzanine Loan (10)
 
523

 
24,818

 
10,846

 
31,210

 
August 2018
Mortgage Loan
 

 

 
19,815

 

 
August 2018
Mezzanine Loan
 

 
65,000

 
14,862

 

 
August 2018
Mezzanine Loan
 

 

 
14,599

 

 
September 2018
Mezzanine Loan
 
2,325

 
45,025

 
34,411

 

 
October 2018
Mezzanine Loan
 

 
33,000

 
26,831

 
26,777

 
December 2018
Mezzanine Loan
 
4,097

 
156,383

 
55,264

 
52,774

 
December 2018
Mezzanine Loan
 
18,883

 
246,758

 
59,917

 
49,625

 
December 2018
Mezzanine Loan
 
6,383

 
16,383

 
5,387

 

 
January 2019
Mezzanine Loan
 

 
38,000

 
21,880

 
21,845

 
March 2019
Mezzanine Loan
 

 
265,000

 
24,677

 

 
April 2019
Mortgage/Jr. Mortgage Participation Loan
 
34,500

 
180,740

 
64,549

 

 
August 2019
Mezzanine Loan
 
2,500

 
187,500

 
37,307

 

 
September 2019
Mortgage/Mezzanine Loan
 
87,620

 

 
107,060

 

 
September 2019
Jr. Mortgage Participation/Mezzanine Loan
 

 
30,000

 
15,599

 

 
July 2021
Mortgage/Mezzanine Loan (11)
 

 

 

 
94,901

 
 

14

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

Loan Type
 
September 30, 2016
Future Funding
Obligations
 
September 30, 2016 Senior
Financing
 
September 30, 2016
Carrying Value (1)
 
December 31, 2015
Carrying Value (1)
 
Maturity
Date (2)
Jr. Mortgage Participation/Mezzanine Loan (5)
 

 

 

 
20,510

 
 
Mezzanine Loan (12)
 

 

 

 
22,625

 
 
Mezzanine Loan (13)
 

 

 

 
74,700

 
 
Mezzanine Loan (14)
 

 

 

 
66,398

 
 
Jr. Mortgage Participation/Mezzanine Loan (7)
 

 

 

 
18,395

 
 
Mezzanine Loan (15)
 

 

 

 
40,346

 
 
Total floating rate
 
$
211,097

 
$
2,415,765

 
$
1,069,255

 
$
1,116,455

 
 
Total
 
$
216,097

 
$
4,340,809

 
$
1,405,389

 
$
1,627,844

 
 

(1)
Carrying value is net of discounts, premiums, original issue discounts and deferred origination fees.
(2)
Represents contractual maturity, excluding any unexercised extension options.
(3)
Carrying value is net of the following amount that was participated out, which is included in other assets and other liabilities on the consolidated balance sheets as a result of the transfer not meeting the conditions for sale accounting: (a) $41.3 million , (b) $5.0 million , (c) $12.0 million , (d) $36.3 million , (e) $14.5 million , (f) $14.6 million , (g) $14.1 million , and (h) $5.1 million .
(4)
In September 2014, we acquired a $26.4 million mortgage loan at a $0.2 million discount and a $5.7 million junior mortgage participation at a $5.7 million discount. The junior mortgage participation was a nonperforming loan at acquisition and is currently on non-accrual status.
(5)
These loans were repaid in July 2016
(6)
In April 2016, we closed on an option to acquire a 20% interest in the underlying asset at a previously agreed upon purchase option valuation, and our mezzanine loan was simultaneously repaid.
(7)
These loans were repaid in March 2016.
(8)
These loans were collateralized by defeasance securities.
(9)
In March 2016, the mortgage was sold.
(10)
In January 2016, the loans were modified. In March 2016, the mortgage was sold.
(11)
This loan was repaid in September 2016.
(12)
This loan was repaid in June 2016.
(13)
This loan was repaid in May 2016.
(14)
In March 2016, we contributed our interest in the loan in exchange for a joint venture interest which is now accounted for under the equity method of accounting. It is included in unconsolidated joint ventures on the consolidated balance sheets.
(15)
This loan was repaid in February 2016.


Preferred Equity Investments
As of September 30, 2016 and December 31, 2015, we held the following preferred equity investments with an aggregate weighted average current yield of 7.32% at September 30, 2016 (in thousands):
Type
 
September 30, 2016
Future Funding
Obligations
 
September 30, 2016
Senior
Financing
 
September 30, 2016
Carrying Value
(1)
 
December 31, 2015
Carrying Value
(1)
 
Initial
Mandatory
Redemption
Preferred equity
 
$

 
$
71,486

 
$
9,978

 
$
9,967

 
March 2018
Preferred equity
 

 
59,034

 
37,867

 
32,209

 
November 2018
 
 
$

 
$
130,520

 
$
47,845

 
$
42,176

 
 

(1)
Carrying value is net of deferred origination fees.
At September 30, 2016 and December 31, 2015, all debt and preferred equity investments were performing in accordance with the terms of the relevant investments, with the exception of a junior mortgage participation acquired in September 2014, which has a carrying value of zero .
We have determined that we have one portfolio segment of financing receivables at September 30, 2016 and 2015 comprising commercial real estate which is primarily recorded in debt and preferred equity investments. Included in other assets is an additional amount of financing receivables totaling $149.6 million and $168.3 million at September 30, 2016 and December 31, 2015, respectively. No financing receivables were 90 days past due at September 30, 2016 .

15

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

6. Investments in Unconsolidated Joint Ventures
We have investments in several real estate joint ventures with various partners. As of September 30, 2016 none of our investments in unconsolidated joint ventures are VIEs. The table below provides general information on each of our joint ventures as of September 30, 2016 :
Property
Partner
Ownership
Interest
Economic
Interest
Approximate Square Feet
Acquisition Date
Acquisition
Price (1)
(in thousands)
131-137 Spring Street
Invesco Real Estate
20.00%
20.00%
68,342

August 2015
$
277,750

76 11th Avenue (2)
Oxford/Vornado
33.33%
36.58%
764,000

March 2016
138,240


(1)
Acquisition price represents the actual or implied gross purchase price for the joint venture, which is not adjusted for subsequent acquisitions of additional interests.
(2)
The joint venture owns two mezzanine notes secured by interests in the entity that owns 76 11th Avenue. The difference between our ownership interest and our economic interest results from our right to 50% of the total exit fee while each of our partners is entitled to receive 25% of the total exit fee.
Acquisition, Development and Construction Arrangement
Based on the characteristics of the following arrangements, which are similar to those of an investment, combined with the expected residual profit of not greater than 50% , we have accounted for these debt and preferred equity investments under the equity method. As of September 30, 2016 and December 31, 2015 , the carrying value for acquisition, development and construction arrangements were as follows (in thousands):
Loan Type
 
September 30, 2016
 
December 31, 2015
 
Maturity Date
Mezzanine Loan and Preferred Equity
 
$
100,000

 
$
99,936

 
March 2017
Mezzanine Loan
 
24,119

 

 
July 2036 (1)
 
 
$
124,119

 
$
99,936

 
 
(1)
The Company has the ability to convert this loan into an equity position starting in 2021 and the borrower is able to force this conversion in 2024.
Sale of Joint Venture Interest or Property
We did not sell any joint venture interest or property during the nine months ended September 30, 2016 .
Mortgages and Other Loans Payable
We generally finance our joint ventures with non-recourse debt. However, in certain cases we have provided guarantees or master leases for tenant space. These guarantees and master leases terminate upon the satisfaction of specified circumstances or repayment of the underlying loans. The first mortgage notes and other loans payable collateralized by the respective joint venture properties and assignment of leases at September 30, 2016 and December 31, 2015 , respectively, are as follows (amounts in thousands):
Property
 
Maturity Date
 
Interest
Rate (1)
 
September 30, 2016
 
December 31, 2015
Floating Rate Debt:
 
 
 
 
 
 
 
 
131-137 Spring Street
 
August 2020
 
2.04
%
 
$
141,000

 
$
141,000

Total joint venture mortgages and other loans payable
 
 
 
$
141,000

 
$
141,000

Deferred financing costs, net
 
 
 
 
 
(4,247
)
 
(5,077
)
Total joint venture mortgages and other loans payable, net
 
 
 
$
136,753

 
$
135,923

(1)
Effective weighted average interest rate for the three months ended September 30, 2016 , taking into account interest rate hedges in effect during the period.

16

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

The combined balance sheets for the unconsolidated joint ventures, at September 30, 2016 and December 31, 2015 are as follows (in thousands):
 
September 30, 2016
 
December 31, 2015
Assets
 
 
 
Commercial real estate property, net
$
281,014

 
$
285,689

Debt and preferred equity investments, net
270,831

 
99,936

Other assets
17,080

 
16,897

Total assets
$
568,925

 
$
402,522

Liabilities and members' equity
 
 
 
Mortgages and other loans payable, net
$
136,753

 
$
135,923

Other liabilities
23,080

 
25,462

Members' equity
409,092

 
241,137

Total liabilities and members' equity
$
568,925

 
$
402,522

Company's investments in unconsolidated joint ventures
$
173,010

 
$
100,192

The combined statements of operations for the unconsolidated joint ventures, from acquisition date through the three and nine months ended September 30, 2016 and 2015 , are as follows (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Total revenues
$
3,707

 
$
6,316

 
$
27,590

 
$
10,608

Operating expenses
(175
)
 
380

 
1,003

 
386

Real estate taxes
33

 
530

 
881

 
530

Interest expense, net of interest income
37

 
421

 
2,144

 
421

Amortization of deferred financing costs

 
171

 
831

 
171

Transaction related costs

 
1,507

 

 
3,299

Depreciation and amortization

 
3,293

 
6,303

 
1,507

Total expenses
$
(105
)
 
$
6,302

 
$
11,162

 
$
6,314

Net income
$
3,812

 
$
14

 
$
16,428

 
$
4,294

Company's equity in net income from unconsolidated joint ventures
4,276

 
2,296

 
10,399

 
6,576


17

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

7. Mortgages and Other Loans Payable
The first mortgages and other loans payable collateralized by the respective properties and assignment of leases or debt investments at September 30, 2016 and December 31, 2015 , respectively, were as follows (amounts in thousands):
Property
 
Maturity Date
 
Interest Rate (1)
 
September 30, 2016
 
December 31, 2015
Fixed Rate Debt:
 
 
 
 
 
 
 
 
919 Third Avenue (2)
 
June 2023
 
5.12
%
 
$
500,000

 
$
500,000

Floating Rate Debt:
 
 
 
 
 
 
 
 
Master Repurchase Agreement
 
July 2018
 
3.01
%
 
134,642

 
253,424

Total mortgages and other loans payable
 
 
 
 
 
$
634,642

 
$
753,424

Deferred financing costs, net of amortization
 
 
 
 
 
(8,503
)
 
(7,696
)
Total mortgages and other loans payable, net
 
 
 
 

 
$
626,139

 
$
745,728


(1)
Effective weighted average interest rate for the three months ended September 30, 2016 .
(2)
We own a 51.0% controlling interest in the joint venture that is the borrower on this loan.
Master Repurchase Agreement
The Master Repurchase Agreement, or MRA, provides us with the ability to sell certain debt investments with a simultaneous agreement to repurchase the same at a certain date or on demand. This MRA has a maximum facility capacity of $300.0 million and bears interest ranging from 225 and 400 basis points over 30-day LIBOR depending on the pledged collateral. Since December 6, 2015, we have been required to pay monthly in arrears a 25 basis point fee on the excess of $150.0 million over the average daily balance during the period if the average daily balance is less than $150.0 million . We seek to mitigate risks associated with our repurchase agreement by managing the credit quality of our assets, early repayments, interest rate volatility, liquidity, and market value. The margin call provisions under our repurchase facility permit valuation adjustments based on capital markets activity, and are not limited to collateral-specific credit marks. To monitor credit risk associated with our debt investments, our asset management team regularly reviews our investment portfolio and is in contact with our borrowers in order to monitor the collateral and enforce our rights as necessary. The risk associated with potential margin calls is further mitigated by our ability to recollateralize the facility with additional assets from our portfolio of debt investments, our ability to satisfy margin calls with cash or cash equivalents and access to additional liquidity through the 2012 credit facility, as defined below.
At September 30, 2016 and December 31, 2015 , the gross book value of the properties and debt and preferred equity investments collateralizing the mortgages and other loans payable, not including assets held for sale, was approximately $1.6 billion and $2.0 billion , respectively.
8. Corporate Indebtedness
2012 Credit Facility
In August 2016, we entered into an amendment to the credit facility that was originally entered into by the Company in November 2012, referred to as the 2012 credit facility. As of September 30, 2016 , the 2012 credit facility, as amended, consisted of a $1.6 billion revolving credit facility and a $1.2 billion term loan, with a maturity date of March 29, 2019 and June 30, 2019, respectively. The revolving credit facility has an as-of-right extension to March 29, 2020. We also have an option, subject to customary conditions, to increase the capacity under the revolving credit facility to $3.0 billion at any time prior to the maturity date for the revolving credit facility without the consent of existing lenders, by obtaining additional commitments from our existing lenders and other financial institutions.
As of September 30, 2016 , the 2012 credit facility bore interest at a spread over LIBOR ranging from (i) 87.5 basis points to 155 basis points for loans under the revolving credit facility and (ii) 95 basis points to 190 basis points for loans under the term loan facility, in each case based on the credit rating assigned to the senior unsecured long term indebtedness of ROP.
At September 30, 2016 , the applicable spread was 125 basis points for the revolving credit facility and 140 basis points for the term loan facility. At September 30, 2016 , the effective interest rate was 1.73% for the revolving credit facility and 1.90% for the term loan facility. We are required to pay quarterly in arrears a 12.5 to 30 basis point facility fee on the total commitments under the revolving credit facility based on the credit rating assigned to the senior unsecured long term indebtedness of ROP. As of September 30, 2016 , the facility fee was 25 basis points.

18

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

As of September 30, 2016 , we had $56.5 million of outstanding letters of credit, zero drawn under the revolving credit facility and $1.2 billion outstanding under the term loan facility, with total undrawn capacity of $1.5 billion under the 2012 credit facility. At September 30, 2016 and December 31, 2015 , the revolving credit facility had a carrying value of $(6.9) million , representing deferred financing costs presented within other liabilities, and $985.1 million , respectively, net of deferred financing costs. At September 30, 2016 and December 31, 2015 , the term loan facility had a carrying value of $1.2 billion and $929.5 million , respectively, net of deferred financing costs.
We, SL Green and the Operating Partnership are all borrowers jointly and severally obligated under the 2012 credit facility. None of SL Green's other subsidiaries are obligors under the 2012 credit facility.
The 2012 credit facility includes certain restrictions and covenants (see Restrictive Covenants below).
Senior Unsecured Notes
The following table sets forth our senior unsecured notes and other related disclosures as of September 30, 2016 and December 31, 2015, respectively, by scheduled maturity date (dollars in thousands):
Issuance
 
September 30,
2016
Unpaid
Principal
Balance
 
September 30,
2016
Accreted
Balance
 
December 31,
2015
Accreted
Balance
 
Coupon
Rate
(1)
 
Effective
Rate
 
Term
(in Years)
 
Maturity Date
August 5, 2011 (2)
 
$
250,000

 
$
249,862

 
$
249,810

 
5.00
%
 
5.00
%
 
7
 
August 2018
March 16, 2010 (2)
 
250,000

 
250,000

 
250,000

 
7.75
%
 
7.75
%
 
10
 
March 2020
November 15, 2012 (2)
 
200,000

 
200,000

 
200,000

 
4.50
%
 
4.50
%
 
10
 
December 2022
December 17, 2015 (2)
 
100,000

 
100,000

 
100,000

 
4.27
%
 
4.27
%
 
10
 
December 2025
March 31, 2006 (3)
 

 

 
255,296

 
 
 
 
 
 
 
 
 
 
$
800,000

 
$
799,862

 
$
1,055,106

 
 
 
 
 
 
 
 
Deferred financing costs, net
 
 
 
(4,942
)
 
(5,303
)
 
 
 
 
 
 
 
 
 
 

 
$
794,920

 
$
1,049,803

 
 
 
 
 
 
 
 

(1)
Interest on the senior unsecured notes is payable semi-annually with principal and unpaid interest due on the scheduled maturity dates.
(2)
Issued by SL Green, the Operating Partnership and ROP, as co-obligors.
(3)
This note was repaid in March 2016.
ROP also provides a guaranty of the Operating Partnership's obligations under its 3.00% Exchangeable Senior Notes due 2017.
Restrictive Covenants
The terms of the 2012 credit facility, as amended, and certain of our senior unsecured notes include certain restrictions and covenants which may limit, among other things, SL Green's ability to pay dividends, make certain types of investments, incur additional indebtedness, incur liens and enter into negative pledge agreements and dispose of assets, and which require compliance with financial ratios relating to the maximum ratio of total indebtedness to total asset value, a minimum ratio of EBITDA to fixed charges, a maximum ratio of secured indebtedness to total asset value and a maximum ratio of unsecured indebtedness to unencumbered asset value. The dividend restriction referred to above provides that SL Green will not during any time when a default is continuing, make distributions with respect to SL Green's common stock or other equity interests, except to enable SL Green to continue to qualify as a REIT for Federal income tax purposes. As of September 30, 2016 and 2015, we were in compliance with all such covenants.
Principal Maturities
Combined aggregate principal maturities of our mortgages and other loans payable, 2012 credit facility and senior unsecured notes as of September 30, 2016 , including as-of-right extension options and put options, were as follows (in thousands):

19

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

 
Scheduled
Amortization
 
Principal
Repayments
 
Revolving
Credit
Facility
 
Unsecured Term Loan
 
Senior Unsecured Notes
 
Total
Remaining 2016
$

 
$

 
$

 
$

 
$

 
$

2017

 

 

 

 

 

2018

 
134,642

 

 

 
250,000

 
384,642

2019

 

 

 
1,183,000

 

 
1,183,000

2020

 

 

 

 
250,000

 
250,000

Thereafter

 
500,000

 

 

 
300,000

 
800,000

 
$

 
$
634,642

 
$

 
$
1,183,000

 
$
800,000

 
$
2,617,642

              
Consolidated interest expense, excluding capitalized interest, was comprised of the following (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Interest expense
$
25,087

 
$
31,136

 
$
84,175

 
$
87,980

Interest capitalized
(362
)
 

 
(799
)
 
(1,107
)
Interest income
(2
)
 
(4
)
 
(9
)
 
(17
)
Interest expense, net
$
24,723

 
$
31,132

 
$
83,367

 
$
86,856

9. Related Party Transactions
Cleaning/ Security/ Messenger and Restoration Services
Alliance Building Services, or Alliance, and its affiliates are partially owned by Gary Green, a son of Stephen L. Green, the chairman of SL Green's board of directors, and provide services to certain properties owned by us. Alliance’s affiliates include First Quality Maintenance, L.P., or First Quality, Classic Security LLC, Bright Star Couriers LLC and Onyx Restoration Works, and provide cleaning, extermination, security, messenger, and restoration services, respectively. In addition, First Quality has the non-exclusive opportunity to provide cleaning and related services to individual tenants at our properties on a basis separately negotiated with any tenant seeking such additional services. An affiliate of ours has entered into an arrangement with Alliance whereby it will receive a profit participation above a certain threshold for services provided by Alliance to certain tenants at certain buildings above the base services specified in their lease agreements.
Income earned from profit participation, which is included in other income on the consolidated statements of operations, was $0.8 million and $2.5 million for the three and nine months ended September 30, 2016 and 2015.
We also recorded expenses for these services, inclusive of capitalized expenses, of $1.2 million and $6.0 million for the three and nine months ended September 30, 2016 , respectively, (excluding services provided directly to tenants), and $2.7 million and $6.7 million for the three and nine months ended September 30, 2015 , respectively.
Allocated Expenses from SL Green
Property operating expenses include an allocation of salary and other operating costs from SL Green based on square footage of the related properties. Such amount was approximately $2.8 million and $8.2 million , for the three and nine months ended September 30, 2016 , respectively. The amount was $2.4 million and $7.4 million for three and nine months ended September 30, 2015 , respectively.
Insurance
We obtained insurance coverage through an insurance program administered by SL Green. In connection with this program, we incurred insurance expense of approximately $1.5 million and $4.4 million for the three and nine months ended September 30, 2016 . We incurred insurance expense of approximately $1.7 million and $5.0 million for the three and nine months ended September 30, 2015 .

20

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

10. Preferred Units
Through a consolidated subsidiary, we have authorized up to  109,161   3.5%  Series A Preferred Units of limited partnership interest, or the Greene Series A Preferred Units, with a liquidation preference of  $1,000.00  per unit. In August 2015, the Company issued  109,161  Greene Series A Preferred Units in conjunction with an acquisition. The Greene Series A Preferred unitholders receive annual dividends of  $35.00  per unit paid on a quarterly basis and dividends are cumulative, subject to certain provisions. The Greene Series A Preferred Units can be redeemed at any time, at the option of the unitholder, either for cash or are convertible on a one-for-one basis, into the Series B Preferred Units of limited partnership interest, or the Greene Series B Preferred Units. The Greene Series B Preferred Units can be converted at any time, at the option of the unitholder, into a number of common stock equal to  6.71348  shares of SL Green common stock for each Greene Series B Preferred Unit. As of September 30, 2016 , no Greene Series B Preferred Units have been issued.
ASC 815 Derivatives and Hedging requires bifurcation of certain embedded derivative instruments, such as conversion features in convertible equity instruments, and their measurement at fair value for accounting purposes. The conversion feature embedded in the Greene Series A Preferred Units was evaluated, and it was determined that the conversion feature should be bifurcated from its host instrument and accounted for as a freestanding derivative. The derivative is reported as a derivative liability in accrued interest and other liabilities on the accompanying consolidated balance sheet and is adjusted to its fair value at each reporting date, with a corresponding adjustment to interest expense, net of interest income. The embedded derivative for the Greene Series A Preferred Units was initially recorded at a fair value of zero on July 22, 2015, the date of issuance. At December 31, 2015, the carrying amount of the derivative was adjusted to its fair value of zero , with a corresponding adjustment to preferred units and interest expense, net of interest income. At September 30, 2016 the carrying amount and fair value of the derivative remained at zero .
11. Partners' Capital
Since consummation of the Merger on January 25, 2007, the Operating Partnership has owned all the economic interests in ROP either by direct ownership or by indirect ownership through our general partner, which is its wholly-owned subsidiary.
Intercompany transactions between SL Green and ROP are generally recorded as contributions and distributions.
12. Fair Value Measurements
We are required to disclose fair value information with regard to our financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value. The FASB guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. We measure and/or disclose the estimated fair value of financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date; Level 2 - inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 - unobservable inputs for the asset or liability that are used when little or no market data is available. We follow this hierarchy for our assets and liabilities measured at fair value on a recurring and nonrecurring basis. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. Our assessment of the significance of the particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
We determine other than temporary impairment in real estate investments and debt and preferred equity investments, including intangibles, utilizing cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, which are classified as Level 3 inputs.
The fair value of derivative instruments is based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well-recognized financial principles and reasonable estimates about relevant future market conditions, which are classified as Level 2 inputs.
The financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, debt and preferred equity investments, mortgages and other loans payable and other secured and unsecured debt. The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses reported in our consolidated balance sheets approximates fair value due to the short term nature of these instruments. The fair value of debt and preferred equity investments, which is classified as Level 3, is estimated by discounting the future cash flows using current interest rates at which similar loans with the same maturities would be made to borrowers with similar credit ratings. The fair value of borrowings, which is classified as Level 3, is estimated by discounting the contractual cash flows of each debt instrument to their present value using adjusted market interest rates, which is provided by a third-party specialist.

21

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

The following table provides the carrying value and fair value of these financial instruments as of September 30, 2016 and December 31, 2015 (in thousands):
 
September 30, 2016
 
December 31, 2015
 
Carrying Value (1)
 
Fair Value
 
Carrying Value (1)
 
Fair Value
Debt and preferred equity investments
$
1,453,234

 
(2)  
 
$
1,670,020

 
(2)  
 
 
 
 
 
 
 
 
Fixed rate debt
$
2,099,862

 
$
2,236,309

 
$
1,585,106

 
$
1,663,078

Variable rate debt  
517,642

 
529,550

 
2,150,424

 
2,164,673

 
$
2,617,504

 
$
2,765,859

 
$
3,735,530

 
$
3,827,751


(1)
Amounts exclude net deferred financing costs.
(2)
At September 30, 2016 , debt and preferred equity investments had an estimated fair value ranging between $1.5 billion and $1.6 billion . At December 31, 2015, debt and preferred equity investments had an estimated fair value ranging between $1.7 billion and $1.8 billion .
Disclosure about fair value of financial instruments was based on pertinent information available to us as of September 30, 2016 and December 31, 2015 . Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.
13. Financial Instruments: Derivatives and Hedging
In the normal course of business, we use a variety of commonly used derivative instruments, such as interest rate swaps, caps, collar and floors, to manage, or hedge interest rate risk. We hedge our exposure to variability in future cash flows for forecasted transactions in addition to anticipated future interest payments on existing debt. We recognize all derivatives on the balance sheets at fair value. Derivatives that are not hedges are adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedge asset, liability, or firm commitment through earnings, or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Reported net income and capital may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows. Currently, all of our designated derivative instruments are effective hedging instruments. As of September 30, 2016 , the Company had not designated any interest rate swap agreements on any debt investment.
Gains and losses on terminated hedges are included in the accumulated other comprehensive loss, and are recognized into earnings over the term of the related senior unsecured notes. As of September 30, 2016 and December 31, 2015 , the deferred net losses from these terminated hedges, which are included in accumulated other comprehensive loss relating to net unrealized loss on derivative instrument, was approximately $1.7 million and $2.0 million , respectively.
Over time, the realized and unrealized gains and losses held in accumulated other comprehensive loss will be reclassified into earnings as an adjustment to interest expense in the same periods in which the hedged interest payments affect earnings. We estimate that approximately $0.4 million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense within the next 12 months.

22

Reckson Operation Partnership, L.P.
Notes to Consolidated Financial Statements (cont.)
September 30, 2016
(unaudited)

The following table presents the effect of our derivative financial instrument that is designated and qualify as a hedging instrument on the consolidated statements of operations for the three months ended September 30, 2016 and 2015 , respectively (in thousands):
 
 
Amount of Gain
Recognized in
Other Comprehensive
Loss
(Effective Portion)
 
Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income
 
Amount of Loss
 Reclassified from
Accumulated Other
Comprehensive Loss  into Income
(Effective Portion)
 
Location of Gain Recognized in Income on Derivative
 
Amount of Gain  Recognized
into Income
(Ineffective Portion)
 
 
Three Months Ended September 30,
 
 
Three Months Ended September 30,
 
 
Three Months Ended September 30,
Derivative
 
2016
 
2015