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Investments in Unconsolidated Joint Ventures | 9 Months Ended
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Sep. 30, 2017
Investments In Unconsolidated Joint Ventures [Abstract] |
Investments In Unconsolidated Joint Ventures | 4. Investments in Unconsolidated Joint Ventures The investments in unconsolidated joint ventures consist of the following at September 30, 2017 and December 31, 2016:
|  |  |  | Nominal % Ownership |  | Carrying Value of Investment (1)
Entity |  | Properties |  |  | September 30, 2017 |  | December 31, 2016
|  |  |  |  |  | (in thousands)
Square 407 Limited Partnership |  | Market Square North |  | 50.0 | % |  | $ | (8,474 | ) |  | $ | (8,134 | )
The Metropolitan Square Associates LLC |  | Metropolitan Square |  | 20.0 | % |  | 2,537 |  |  | 2,004 |
BP/CRF 901 New York Avenue LLC |  | 901 New York Avenue |  | 25.0 | % | (2) | (10,747 | ) |  | (10,564 | )
WP Project Developer LLC |  | Wisconsin Place Land and Infrastructure |  | 33.3 | % | (3) | 40,158 |  |  | 41,605 |
Annapolis Junction NFM, LLC |  | Annapolis Junction |  | 50.0 | % | (4) | 18,771 |  |  | 20,539 |
540 Madison Venture LLC |  | 540 Madison Avenue |  | 60.0 | % |  | 67,046 |  |  | 67,816 |
500 North Capitol Venture LLC |  | 500 North Capitol Street, NW |  | 30.0 | % |  | (3,642 | ) |  | (3,389 | )
501 K Street LLC |  | 1001 6th Street |  | 50.0 | % | (5) | 42,442 |  |  | 42,528 |
Podium Developer LLC |  | The Hub on Causeway |  | 50.0 | % |  | 55,917 |  |  | 29,869 |
Residential Tower Developer LLC |  | The Hub on Causeway - Residential |  | 50.0 | % |  | 25,811 |  |  | 20,803 |
Hotel Tower Developer LLC |  | The Hub on Causeway - Hotel |  | 50.0 | % |  | 1,596 |  |  | 933 |
1265 Main Office JV LLC |  | 1265 Main Street |  | 50.0 | % |  | 4,686 |  |  | 4,779 |
BNY Tower Holdings LLC |  | Dock 72 at the Brooklyn Navy Yard |  | 50.0 | % | (6) | 67,901 |  |  | 33,699 |
CA-Colorado Center Limited Partnership |  | Colorado Center |  | 50.0 | % |  | 263,834 |  |  | 510,623 |
7750 Wisconsin Avenue LLC |  | 7750 Wisconsin Avenue |  | 50.0 | % | (6) | 21,101 |  |  | N/A |
|  |  |  |  |  | $ | 588,937 |  |  | $ | 753,111 |
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(1) | Investments with deficit balances aggregating approximately $22.9 million and $22.1 million at September 30, 2017 and December 31, 2016, respectively, have been reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
(2) | The Company’s economic ownership has increased based on the achievement of certain return thresholds.
(3) | 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.
(4) | The joint venture owns four in-service buildings and two undeveloped land parcels.
(5) | 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.
(6) | The 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 exception, 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 venture 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:
| September 30, 2017 |  | December 31, 2016
| (in thousands)
ASSETS |  |  |
Real estate and development in process, net | $ | 1,716,447 |  |  | $ | 1,519,217 |
Other assets | 374,484 |  |  | 297,263 |
Total assets | $ | 2,090,931 |  |  | $ | 1,816,480 |
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY |  |  |
Mortgage and notes payable, net | $ | 1,411,401 |  |  | $ | 865,665 |
Other liabilities | 86,971 |  |  | 67,167 |
Members’/Partners’ equity | 592,559 |  |  | 883,648 |
Total liabilities and members’/partners’ equity | $ | 2,090,931 |  |  | $ | 1,816,480 |
Company’s share of equity | $ | 291,029 |  |  | $ | 450,662 |
Basis differentials (1) | 297,908 |  |  | 302,449 |
Carrying value of the Company’s investments in unconsolidated joint ventures (2) | $ | 588,937 |  |  | $ | 753,111 |
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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 September 30, 2017 and December 31, 2016, there was an aggregate basis differential of approximately $324.4 million and $328.8 million, respectively, 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 $22.9 million and $22.1 million at September 30, 2017 and December 31, 2016, 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:
| Three months ended September 30, |  | Nine months ended September 30,
| 2017 |  | 2016 |  | 2017 |  | 2016
| (in thousands)
Total revenue (1) | $ | 55,516 |  |  | $ | 49,002 |  |  | $ | 166,139 |  |  | $ | 125,039 |
Expenses |  |  |  |  |  |  |
Operating | 23,128 |  |  | 21,753 |  |  | 67,310 |  |  | 54,779 |
Depreciation and amortization | 16,440 |  |  | 12,038 |  |  | 44,973 |  |  | 30,306 |
Total expenses | 39,568 |  |  | 33,791 |  |  | 112,283 |  |  | 85,085 |
Operating income | 15,948 |  |  | 15,211 |  |  | 53,856 |  |  | 39,954 |
Other expense |  |  |  |  |  |  |
Interest expense | 13,088 |  |  | 8,400 |  |  | 31,815 |  |  | 25,172 |
Net income | $ | 2,860 |  |  | $ | 6,811 |  |  | $ | 22,041 |  |  | $ | 14,782 |
Company’s share of net income | $ | 2,909 |  |  | $ | 3,179 |  |  | $ | 11,576 |  |  | $ | 6,830 |
Basis differential (2) | (2,066 | ) |  | (1,715 | ) |  | (4,541 | ) |  | (1,341 | )
Income from unconsolidated joint ventures | $ | 843 |  |  | $ | 1,464 |  |  | $ | 7,035 |  |  | $ | 5,489 |
_______________
(1) | Includes straight-line rent adjustments of approximately $5.1 million and $5.2 million for the three months ended September 30, 2017 and 2016, respectively, and $16.4 million and $11.0 million for the nine months ended September 30, 2017 and 2016, respectively.
(2) | Includes straight-line rent adjustments of approximately $0.7 million and $0.7 million for the three months ended September 30, 2017 and 2016, respectively, and $2.2 million and $0.7 million for the nine months ended September 30, 2017 and 2016, respectively. Also includes net above-/below-market rent adjustments of approximately $0.4 million and $0.5 million for the three months ended September 30, 2017 and 2016, respectively, and $1.3 million and $0.5 million for the nine months ended September 30, 2017 and 2016, respectively.
On July 10, 2017, the Company acquired an additional 0.2% interest in the unconsolidated joint venture that owns Colorado Center located in Santa Monica, California for approximately $2.1 million in cash. Following the acquisition, the Company owns a 50% interest in the joint venture. The Company continues to account for the joint venture under the equity method of accounting as there were no changes to the rights of the members as a result of the acquisition. On July 28, 2017, the unconsolidated joint venture obtained mortgage financing collateralized by the property totaling $550.0 million. The mortgage financing bears interest at a fixed rate of 3.56% per annum and matures on August 9, 2027. The loan requires interest-only payments during the 10-year term of the loan, with the entire principal amount due at maturity. The joint venture distributed to the partners the net proceeds from the financing totaling $502.0 million, of which the Company’s share was $251.0 million. Colorado Center is a six-building office complex that sits on a 15-acre site and contains an aggregate of approximately 1,118,000 net rentable square feet with an underground parking garage for 3,100 vehicles. On August 7, 2017, the Company entered into a joint venture with The Bernstein Companies to develop an approximately 722,000 net rentable square foot (subject to adjustment based on finalized building design) build-to-suit Class A office building and below-grade parking garage at 7750 Wisconsin Avenue in Bethesda, Maryland. The joint venture entered into a lease agreement with an affiliate of Marriott International, Inc. under which Marriott will lease 100% of the office building and garage for a term of 20 years, and the building will serve as Marriott’s new worldwide headquarters. Marriott has agreed to fund 100% of the related tenant improvement costs and leasing commissions for the office building. The Company will serve as co-development manager for the venture and expects to commence construction in 2018. The Company and The Bernstein Companies each own a 50% interest in the joint venture. For its initial contribution, The Bernstein Companies contributed land with an initial fair value of $72.0 million and cash and improvements aggregating approximately $4.9 million. The Company contributed cash and improvements aggregating approximately $20.8 million for its initial contribution, of which $11.0 million was distributed to The Bernstein Companies. In addition, the Company was required to fund $25.0 million into an escrow account to be used by the joint venture to fund future development costs. See also Note 7. On September 6, 2017, a joint venture in which the Company has a 50% interest obtained construction financing with a total commitment of $204.6 million collateralized by its Hub on Causeway development project. The construction financing bears interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2021, with two, one-year extension options, subject to certain conditions. As of September 30, 2017, the venture had not drawn any funds under the loan. The Hub on Causeway is an approximately 385,000 net rentable square foot project containing retail and office space located in Boston, Massachusetts. In connection with the construction financing, the Company obtained the right to complete the construction of the garage underneath the project being developed by an affiliate of its joint venture partner and obtain funding from the garage construction lender. The Company agreed to guaranty completion of the garage to the construction lender and an affiliate of its partner agreed to reimburse the Company for the partner’s share of any payments made under the guaranty.

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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=66011266&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=64825282&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=64825282&loc=d3e32787-111569 + Details
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