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Investments in Unconsolidated Joint Ventures | 12 Months Ended
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Dec. 31, 2016
Investments In Unconsolidated Joint Ventures [Abstract] |
Investments In Unconsolidated Joint Ventures | 5. Investments in Unconsolidated Joint Ventures The investments in unconsolidated joint ventures consist of the following at December 31, 2016 and 2015:
|  |  |  |  |  | Carrying Value of Investment (1)
Entity |  | Properties |  | Nominal % Ownership |  | December 31, 2016 |  | December 31, 2015
|  |  |  |  |  | (in thousands)
Square 407 Limited Partnership |  | Market Square North |  | 50.0 | % |  | $ | (8,134 | ) |  | $ | (9,951 | )
BP/CRF Metropolitan Square LLC |  | Metropolitan Square |  | 20.0 | % | (2) | 2,004 |  |  | 9,179 |
901 New York LLC |  | 901 New York Avenue |  | 25.0 | % | (3) | (10,564 | ) |  | (11,958 | )
WP Project Developer LLC |  | Wisconsin Place Land and Infrastructure |  | 33.3 | % | (4) | 41,605 |  |  | 43,524 |
Annapolis Junction NFM, LLC |  | Annapolis Junction |  | 50.0 | % | (5) | 20,539 |  |  | 29,009 |
540 Madison Venture LLC |  | 540 Madison Avenue |  | 60.0 | % |  | 67,816 |  |  | 68,983 |
500 North Capitol LLC |  | 500 North Capitol Street, NW |  | 30.0 | % |  | (3,389 | ) |  | (3,292 | )
501 K Street LLC |  | 1001 6th Street |  | 50.0 | % | (6) | 42,528 |  |  | 42,584 |
Podium Developer LLC |  | The Hub on Causeway - Podium |  | 50.0 | % |  | 29,869 |  |  | 18,508 |
Residential Tower Developer LLC |  | The Hub on Causeway - Residential |  | 50.0 | % |  | 20,803 |  |  | N/A |
Hotel Tower Developer LLC |  | The Hub on Causeway - Hotel |  | 50.0 | % |  | 933 |  |  | N/A |
1265 Main Office JV LLC |  | 1265 Main Street |  | 50.0 | % |  | 4,779 |  |  | 11,916 |
BNY Tower Holdings LLC |  | Dock 72 at the Brooklyn Navy Yard |  | 50.0 | % | (7) | 33,699 |  |  | 11,521 |
CA-Colorado Center Limited Partnership |  | Colorado Center |  | 49.8 | % |  | 510,623 |  |  | N/A |
|  |  |  |  |  | $ | 753,111 |  |  | $ | 210,023 |
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(1) | Investments with deficit balances aggregating approximately $22.1 million and $25.2 million at December 31, 2016 and 2015, respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
(2) | On October 20, 2016, the Company sold a 31% ownership interest in this joint venture.
(3) | The Company’s economic ownership has increased based on the achievement of certain return thresholds.
(4) | The Company’s wholly-owned entity that owns the office component of the project also owns a 33.3% interest in the entity owning the land, parking garage and infrastructure of the project.
(5) | The joint venture owns four in-service buildings and two undeveloped land parcels.
(6) | Under the joint venture agreement for this land parcel, the partner will be entitled to up to two additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization.
(7) | This entity is a VIE (See Note 2).
Certain of the Company’s unconsolidated joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. With limited exceptions under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners. Under certain of the Company's joint ventures agreements, if certain return thresholds are achieved the partners will be entitled to an additional promoted interest or payments. The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows:
| December 31, 2016 |  | December 31, 2015
| (in thousands)
ASSETS |  |  |
Real estate and development in process, net | $ | 1,519,217 |  |  | $ | 1,072,412 |
Other assets | 297,263 |  |  | 252,285 |
Total assets | $ | 1,816,480 |  |  | $ | 1,324,697 |
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY |  |  |
Mortgage and notes payable, net | $ | 865,665 |  |  | $ | 830,125 |
Other liabilities | 67,167 |  |  | 44,549 |
Members’/Partners’ equity | 883,648 |  |  | 450,023 |
Total liabilities and members’/partners’ equity | $ | 1,816,480 |  |  | $ | 1,324,697 |
Company’s share of equity | $ | 450,662 |  |  | $ | 237,070 |
Basis differentials (1) | 302,449 |  |  | (27,047 | )
Carrying value of the Company’s investments in unconsolidated joint ventures (2) | $ | 753,111 |  |  | $ | 210,023 |
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(1) | This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials result from impairments of investments, acquisitions through joint ventures with no change in control and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level. At December 31, 2016, there is an aggregate basis differential of approximately $328.8 million between the carrying value of the Company’s investment in the joint venture that owns Colorado Center and the joint venture’s basis in the assets and liabilities, which differential (excluding land) shall be amortized over the remaining lives of the related assets and liabilities.
(2) | Investments with deficit balances aggregating approximately $22.1 million and $25.2 million at December 31, 2016 and 2015, respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows:
| For the year ended December 31,
| 2016 |  | 2015 |  | 2014
| (in thousands)
Total revenue (1) | $ | 177,182 |  |  | $ | 155,642 |  |  | $ | 158,161 |
Expenses |  |  |  |  |
Operating | 76,741 |  |  | 65,093 |  |  | 62,974 |
Depreciation and amortization | 44,989 |  |  | 36,057 |  |  | 37,041 |
Total expenses | 121,730 |  |  | 101,150 |  |  | 100,015 |
Operating income | 55,452 |  |  | 54,492 |  |  | 58,146 |
Other income (expense) |  |  |  |  |
Interest expense | (34,016 | ) |  | (32,176 | ) |  | (31,896 | )
Net income | $ | 21,436 |  |  | $ | 22,316 |  |  | $ | 26,250 |
Company’s share of net income (2) | $ | 9,873 |  |  | $ | 22,031 |  |  | $ | 11,913 |
Basis differential (3) | (1,799 | ) |  | 739 |  |  | 856 |
Income from unconsolidated joint ventures | $ | 8,074 |  |  | $ | 22,770 |  |  | $ | 12,769 |
Gain on sale of investment in unconsolidated joint venture | $ | 59,370 |  |  | $ | — |  |  | $ | — |
_______________
(1) | Includes straight-line rent adjustments of approximately $18.1 million, $3.9 million and $3.0 million for the years ended December 31, 2016, 2015 and 2014, respectively.
(2) | During the year ended December 31, 2015, the Company received a distribution of approximately $24.5 million, which was generated from the excess loan proceeds from the refinancing of 901 New York Avenue’s mortgage loan to a new 10-year mortgage loan totaling $225.0 million. The Company’s allocation of income and distributions for the year ended December 31, 2015 was not proportionate to its nominal ownership interest as a result of the achievement of specified investment return thresholds, as provided for in the joint venture agreement.
(3) | Includes the Company’s share of straight-line rent adjustments of approximately $1.4 million and net below-market rent adjustments of approximately $0.9 million for the year ended December 31, 2016.
On April 11, 2016, a joint venture in which the Company has a 50% interest received a notice of event of default from the lender for the loan collateralized by its Annapolis Junction Building One property. The event of default relates to the loan to value ratio not being in compliance with the loan agreement. The loan has an outstanding balance of approxim ately $39.6 million, is non-recourse to the Company, bears interest at a variable rate equal to LIBOR plus 1.75% per annum and has a stated maturity date of March 31, 2018, with one, three-year extension option, subject to certain conditions including that the loan is not in default. On October 17, 2016, the lender notified the joint venture that it has elected to charge the default interest rate on the loan equal to LIBOR plus 5.75% per annum. The joint venture is currently in discussions with the lender regarding the event of default, although there can be no assurance as to the outcome of those discussions. The estimated fair value of the Company’s investment in the unconsolidated joint venture exceeds its carrying value. Annapolis Junction Building One is a Class A office property with approximately 118,000 net rentable square feet located in Annapolis, Maryland. On July 1, 2016, the Company entered the Los Angeles market through its acquisition of a 49.8% interest in an existing joint venture that owns and operates Colorado Center located in Santa Monica, California for a gross purchase price of approximately $511.1 million, or approximately $503.6 million in cash net of credits for free rent, unfunded leasing costs and other adjustments. Colorado Center is a six-building office complex that sits on a 15-acre site and contains an aggregate of approximately 1,184,000 net rentable square feet with an underground parking garage for 3,100 vehicles. The following table summarizes the allocation of the Company’s aggregate purchase price for its 49.8% interest in Colorado Center at the date of acquisition (in thousands).
Land and improvements | $ | 189,597 |
Site improvements | 9,050 |
Building and improvements | 259,592 |
Tenant improvements | 17,234 |
In-place lease intangibles | 43,157 |
Above-market lease intangible | 819 |
Below-market lease intangible | (16,461 | )
Net assets | $ | 502,988 |
On October 1, 2016, a joint venture in which the Company has a 50% interest completed and fully placed in-service 1265 Main Street, a Class A office project with approximately 115,000 net rentable square feet located in Waltham, Massachusetts. On December 8, 2016, the joint venture obtained mortgage financing totaling $40.4 million collateralized by the property. The mortgage loan bears interest at a fixed rate of 3.77% per annum and matures on January 1, 2032. On October 20, 2016, the Company and its partner in the unconsolidated joint venture that owns Metropolitan Square located in Washington, DC, completed the sale of an 80% interest in the joint venture for a gross sale price of approximately $282.4 million, including the assumption by the buyer of its pro rata share of the mortgage loan collateralized by the property totaling approximately $133.4 million. In addition, the buyer agreed to assume certain unfunded leasing costs totaling approximately $14.2 million. Net proceeds to the Company totaled approximately $58.2 million, resulting in a gain on sale of investment totaling approximately $59.4 million. Prior to the sale, the Company owned a 51% interest and its partner owned a 49% interest in the joint venture. Following the sale, the Company continues to own a 20% interest in the joint venture with the buyer owning the remaining 80%. Metropolitan Square is an approximately 607,000 net rentable square foot Class A office property. On November 15, 2016, a joint venture in which the Company has a 50% interest extended the loan collateralized by its Annapolis Junction Building Six property. At the time of the extension, the loan had an outstanding balance of approximately $12.9 million and was scheduled to mature on November 17, 2016. The extended loan has a total commitment amount of approximately $15.4 million, bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on November 17, 2018. Annapolis Junction Building Six is a Class A office property with approximately 119,000 net rentable square feet located in Annapolis, Maryland. On November 28, 2016, the Company entered into a joint venture with the partner at its North Station development to acquire the air rights for the future development of a hotel property at the site. The joint venture partner contributed an air rights parcel and improvements, with a fair value of approximately $7.4 million, for its initial 50% interest in the joint venture. The Company contributed improvements totaling approximately $0.7 million and will contribute cash totaling approximately $6.7 million for its initial 50% interest. On November 28, 2016, the joint venture entered into a 99-year air rights lease with a third-party hotel developer/operator. In addition, on November 28, 2016, the Company and its partner entered into a joint venture to acquire the air rights for the future development of a residential tower at the site, consisting of an approximately 40-story residential tower totaling approximately 320,000 rentable square feet comprised of 440 apartment units. The joint venture partner contributed an air rights parcel, with a fair value of approximately $24.2 million, for its initial 50% interest in the joint venture. The Company contributed cash and improvements totaling approximately $17.7 million and will contribute cash totaling approximately $6.5 million for its initial 50% interest. On December 7, 2016, two joint ventures, in which the Company has a 50% interest in each, combined and extended mortgage loans totaling approximately $21.6 million and $15.1 million collateralized by Annapolis Junction Building Seven and Building Eight, respectively. On April 4, 2016, the mortgage loan collateralized by Annapolis Junction Building Seven had been extended from April 4, 2016 to April 4, 2017, with one, one-year extension option, subject to certain conditions, and bore interest at a variable rate equal to LIBOR plus 1.65% per annum. The mortgage loan collateralized by Annapolis Junction Building Eight bore interest at a variable rate equal to LIBOR plus 1.50% per annum and was scheduled to mature on June 23, 2017, with two, one-year extension options, subject to certain conditions. The new mortgage loan has a total commitment amount of approximately $42.0 million, with an initial balance totaling approximately $36.7 million, bears interest at a variable rate equal to LIBOR plus 2.35% per annum and matures on December 7, 2019, with three, one-year extension options, subject to certain conditions. Annapolis Junction Building Seven and Building Eight are Class A office properties with approximately 127,000 and 126,000 net rentable square feet, respectively, located in Annapolis, Maryland. On December 19, 2016, a joint venture in which the Company has a 50% interest obtained construction financing with a total commitment of $250.0 million collateralized by its Dock 72 development project. The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on December 18, 2020, with two, one-year extension options, subject to certain conditions. As of December 31, 2016, there have been no amounts drawn under the loan. Dock 72 is a Class A office project with approximately 670,000 net rentable square feet located in Brooklyn, New York.

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- Definition Investments In Unconsolidated Joint Ventures [Abstract] + References No definition available. + Details
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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32847-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=49116238&loc=d3e32787-111569 + Details
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