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Investments in Unconsolidated Joint Ventures | 3 Months Ended
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Mar. 31, 2020
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 March 31, 2020 and December 31, 2019:
|  |  |  |  |  | Carrying Value of Investment (1)
Entity |  | Properties |  | Nominal % Ownership |  | March 31, 2020 |  | December 31, 2019
|  |  |  |  |  | (in thousands)
Square 407 Limited Partnership |  | Market Square North |  | 50.0 | % |  | $ | (4,469 | ) |  | $ | (4,872 | )
BP/CRF Metropolitan Square, LLC |  | Metropolitan Square |  | 20.0 | % |  | 13,130 |  |  | 9,134 |
901 New York, LLC |  | 901 New York Avenue |  | 25.0 | % | (2) | (12,069 | ) |  | (12,113 | )
WP Project Developer LLC |  | Wisconsin Place Land and Infrastructure |  | 33.3 | % | (3) | 36,446 |  |  | 36,789 |
Annapolis Junction NFM LLC |  | Annapolis Junction |  | 50.0 | % | (4) | 25,461 |  |  | 25,391 |
540 Madison Venture LLC |  | 540 Madison Avenue |  | 60.0 | % | (5) | 2,961 |  |  | 2,953 |
500 North Capitol Venture LLC |  | 500 North Capitol Street, NW |  | 30.0 | % |  | (5,688 | ) |  | (5,439 | )
501 K Street LLC |  | 1001 6th Street |  | 50.0 | % | (6) | 42,774 |  |  | 42,496 |
Podium Developer LLC |  | The Hub on Causeway - Podium |  | 50.0 | % |  | 49,605 |  |  | 49,466 |
Residential Tower Developer LLC |  | Hub50House |  | 50.0 | % |  | 54,414 |  |  | 55,092 |
Hotel Tower Developer LLC |  | The Hub on Causeway - Hotel Air Rights |  | 50.0 | % |  | 9,889 |  |  | 9,883 |
Office Tower Developer LLC |  | 100 Causeway Street |  | 50.0 | % |  | 57,079 |  |  | 56,606 |
1265 Main Office JV LLC |  | 1265 Main Street |  | 50.0 | % |  | 3,636 |  |  | 3,780 |
BNY Tower Holdings LLC |  | Dock 72 |  | 50.0 | % |  | 95,362 |  |  | 94,804 |
BNYTA Amenity Operator LLC |  | Dock 72 |  | 50.0 | % |  | — |  |  | — |
CA-Colorado Center Limited Partnership |  | Colorado Center |  | 50.0 | % |  | 251,146 |  |  | 252,069 |
7750 Wisconsin Avenue LLC |  | 7750 Wisconsin Avenue |  | 50.0 | % |  | 57,003 |  |  | 56,247 |
BP-M 3HB Venture LLC |  | 3 Hudson Boulevard |  | 25.0 | % |  | 84,301 |  |  | 67,499 |
SMBP Venture LP |  | Santa Monica Business Park |  | 55.0 | % |  | 151,997 |  |  | 163,937 |
Platform 16 Holdings LP |  | Platform 16 |  | 55.0 | % | (7) | 93,991 |  |  | 29,501 |
Gateway Portfolio Holdings LLC |  | Gateway Commons |  | 50.0 | % | (8) | 348,143 |  |  | N/A |
|  |  |  |  |  | $ | 1,355,112 |  |  | $ | 933,223 |
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(1) | Investments with deficit balances aggregating approximately $22.2 million and $22.4 million at March 31, 2020 and December 31, 2019, respectively, are included 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. At March 31, 2020 and December 31, 2019, the Company’s economic ownership was approximately 50%.
(3) | The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.3% interest in the joint venture entity that owns the land, parking garage and infrastructure of the project.
(4) | The joint venture owns three in-service buildings and two undeveloped land parcels.
(5) | T he property was sold on June 27, 2019. As of March 31, 2020 and December 31, 2019, the investment is comprised of undistributed cash.
(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).
(8) | As a result of the partner’s deferred contribution, the Company has an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner.
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 venture agreements, if certain return thresholds are achieved, the partners or the Company 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:
| March 31, 2020 |  | December 31, 2019
| (in thousands)
ASSETS |  |  |
Real estate and development in process, net (1) | $ | 4,469,460 |  |  | $ | 3,904,400 |
Other assets | 578,468 |  |  | 502,706 |
Total assets | $ | 5,047,928 |  |  | $ | 4,407,106 |
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY |  |  |
Mortgage and notes payable, net | $ | 2,312,938 |  |  | $ | 2,218,853 |
Other liabilities (2) | 638,892 |  |  | 749,675 |
Members’/Partners’ equity | 2,096,098 |  |  | 1,438,578 |
Total liabilities and members’/partners’ equity | $ | 5,047,928 |  |  | $ | 4,407,106 |
Company’s share of equity | $ | 956,136 |  |  | $ | 591,905 |
Basis differentials (3) | 398,976 |  |  | 341,318 |
Carrying value of the Company’s investments in unconsolidated joint ventures (4) | $ | 1,355,112 |  |  | $ | 933,223 |
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(1) | At March 31, 2020 and December 31, 2019, this amount includes right of use assets - finance leases totaling approximately $248.9 million and $383.9 million, respectively, and right of use assets - operating leases totaling approximately $11.9 million and $12.1 million, respectively.
(2) | At March 31, 2020 and December 31, 2019, this amount includes lease liabilities - finance leases totaling approximately $391.0 million and $510.8 million, respectively, and lease liabilities - operating leases totaling approximately $17.4 million and $17.3 million, respectively.
(3) | 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 March 31, 2020 and December 31, 2019, there was an aggregate basis differential of approximately $310.1 million and $311.3 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. At March 31, 2020, there was an aggregate basis differential of approximately $55.7 million between the carrying value of the Company’s investment in the joint venture that owns Gateway Commons and the joint venture’s basis in the assets and liabilities. These basis differentials (excluding land) shall be amortized over the remaining lives of the related assets and liabilities.
(4) | Investments with deficit balances aggregating approximately $22.2 million and $22.4 million at March 31, 2020 and December 31, 2019, 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 March 31,
| 2020 |  | 2019
| (in thousands)
Total revenue (1) | $ | 93,203 |  |  | $ | 82,955 |
Expenses |  |  |
Operating | 35,401 |  |  | 30,499 |
Depreciation and amortization | 32,035 |  |  | 28,646 |
Total expenses | 67,436 |  |  | 59,145 |
Other income (expense) |  |  |
Interest expense | (22,583 | ) |  | (20,757 | )
Net income | $ | 3,184 |  |  | $ | 3,053 |
Company’s share of net income | $ | 1,252 |  |  | $ | 1,584 |
Basis differential (2) | (1,621 | ) |  | (1,371 | )
Income (loss) from unconsolidated joint ventures | $ | (369 | ) |  | $ | 213 |
_______________
(1) | Includes straight-line rent adjustments of approximately $9.7 million and $5.8 million for the three months ended March 31, 2020 and 2019, respectively.
(2) | Includes straight-line rent adjustments of approximately $0.5 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively. Also includes net above-/below-market rent adjustments of approximately $0.3 million and $0.4 million for the three months ended March 31, 2020 and 2019, respectively.
On January 28, 2020, the Company entered into a joint venture with a third party to own, operate and develop properties at its Gateway Commons complex located in South San Francisco, California. The Company contributed its 601, 611 and 651 Gateway properties and development rights with an agreed upon value aggregating approximately $350.0 million for its 50% interest in the joint venture (See Note 3). 601, 611 and 651 Gateway consist of three Class A office properties aggregating approximately 768,000 net rentable square feet. The partner contributed three properties and development rights with an agreed upon value aggregating approximately $280.8 million at closing and will contribute cash totaling approximately $69.2 million in the future for its 50% ownership interest in the joint venture. As a result of the partner’s deferred contribution, the Company has an initial approximately 55% interest in the joint venture. Future development projects will be owned 49% by the Company and 51% by its partner. On January 28, 2020, a joint venture in which the Company has a 55% interest commenced development of the first phase of its Platform 16 project located in San Jose, California. The first phase of the Platform 16 development project consists of an approximately 390,000 net rentable square foot Class A office building and a below-grade parking garage. Though the joint venture has completed site preparation work, in consultation with the Company’s partner, the joint venture has paused construction activities and it will revisit its plans once the economic impact of COVID-19 becomes clearer. On February 20, 2020, the joint venture acquired the land underlying the ground lease for a purchase price totaling approximately $134.8 million. The joint venture had previously made a deposit totaling $15.0 million, which deposit was credited against the purchase price. Platform 16 consists of a parcel of land totaling approximately 5.6 acres that is expected to support the development of approximately 1.1 million square feet of commercial office space. On March 18, 2020, a joint venture in which the Company has a 50% interest extended the mortgage loan collateralized by Annapolis Junction Building Seven and Building Eight. At the time of the extension, the outstanding balance of the loan totaled approximately $34.6 million, bore interest at a variable rate equal to LIBOR plus 2.35% per annum and matured on March 6, 2020. The extended loan matures on June 30, 2020. 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.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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