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Investments in Unconsolidated Joint Ventures | 12 Months Ended
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Dec. 31, 2022
Investments In Unconsolidated Joint Ventures [Abstract] |
Investments In Unconsolidated Joint Ventures | 6. Investments in Unconsolidated Joint Ventures The investments in unconsolidated joint ventures consist of the following at December 31, 2022 and December 31, 2021:
|  |  |  |  |  | Carrying Value of Investment (1)
Entity |  | Properties |  | Nominal % Ownership |  | December 31, 2022 |  | December 31, 2021
|  |  |  |  |  | (in thousands)
Square 407 Limited Partnership |  | Market Square North |  | 50.00 | % |  | $ | (6,198) |  |  | $ | (1,205) |
BP/CRF Metropolitan Square LLC |  | Metropolitan Square |  | 20.00 | % |  | (37,629) |  |  | (15,356) |
901 New York, LLC |  | 901 New York Avenue |  | 25.00 | % | (2) | (12,493) |  |  | (12,597) |
WP Project Developer LLC |  | Wisconsin Place Land and Infrastructure |  | 33.33 | % | (3) | 31,971 |  |  | 33,732 |
500 North Capitol Venture LLC |  | 500 North Capitol Street, NW |  | 30.00 | % |  | (9,185) |  |  | (7,913) |
501 K Street LLC |  | 1001 6th Street |  | 50.00 | % | (4) | 42,922 |  |  | 42,576 |
Podium Developer LLC |  | The Hub on Causeway - Podium |  | 50.00 | % |  | 46,839 |  |  | 48,980 |
Residential Tower Developer LLC |  | Hub50House |  | 50.00 | % |  | 45,414 |  |  | 47,774 |
Hotel Tower Developer LLC |  | The Hub on Causeway - Hotel Air Rights |  | 50.00 | % |  | 12,366 |  |  | 11,505 |
Office Tower Developer LLC |  | 100 Causeway Street |  | 50.00 | % |  | 59,716 |  |  | 57,687 |
1265 Main Office JV LLC |  | 1265 Main Street |  | 50.00 | % |  | 3,465 |  |  | 3,541 |
BNY Tower Holdings LLC |  | Dock 72 |  | 50.00 | % | (5) | (19,921) |  |  | 28,412 |
CA-Colorado Center, LLC |  | Colorado Center |  | 50.00 | % |  | 233,862 |  |  | 231,479 |
7750 Wisconsin Avenue LLC |  | 7750 Wisconsin Avenue |  | 50.00 | % |  | 52,152 |  |  | 61,626 |
BP-M 3HB Venture LLC |  | 3 Hudson Boulevard |  | 25.00 | % |  | 116,397 |  |  | 116,306 |
SMBP Venture LP |  | Santa Monica Business Park |  | 55.00 | % |  | 164,735 |  |  | 156,639 |
Platform 16 Holdings LP |  | Platform 16 |  | 55.00 | % | (6) | 158,109 |  |  | 109,086 |
Gateway Portfolio Holdings LLC |  | Gateway Commons |  | 50.00 | % | (7) | 324,038 |  |  | 327,148 |
Rosecrans-Sepulveda Partners 4, LLC |  | Beach Cities Media Campus |  | 50.00 | % |  | 27,000 |  |  | 27,106 |
Safeco Plaza REIT LLC |  | Safeco Plaza |  | 33.67 | % | (8) | 69,785 |  |  | 72,545 |
360 PAS Holdco LLC |  | 360 Park Avenue South |  | 42.21 | % | (9) | 114,992 |  |  | 106,855 |
PR II/BXP Reston Gateway LLC |  | Reston Next Residential |  | 20.00 | % | (10) | 11,351 |  |  | N/A
751 Gateway Holdings LLC |  | 751 Gateway |  | 49.00 | % | (7) | 80,714 |  |  | N/A
200 Fifth Avenue JV LLC |  | 200 Fifth Avenue |  | 26.69 | % |  | 120,083 |  |  | N/A
|  |  |  |  |  | $ | 1,630,485 |  |  | $ | 1,445,926 |
_______________ (1)Investments with deficit balances aggregating approximately $85.4 million and $37.1 million at December 31, 2022 and December 31, 2021, 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 December 31, 2022 and December 31, 2021, the Company’s economic ownership was approximately 50%. (3)The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.33% interest in the joint venture entity that owns the land, parking garage and infrastructure of the project. (4)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 in excess of 520,000 square feet and achieving certain project returns at stabilization. (5)This property includes net equity balances from the amenity joint venture. (6)This entity is a VIE (See Note 2). (7)On June 16, 2022, in accordance with the Gateway Commons joint venture agreement, 751 Gateway was segregated into a new single-purpose joint venture. (8)The Company’s ownership includes (1) a 33.0% direct interest in the joint venture, and (2) an additional 1% interest in each of the two entities through which each partner owns its interest in the joint venture. (9)The Company’s ownership includes (1) a 35.79% direct interest in the joint venture, (2) an additional 5.837% indirect ownership in the joint venture, and (3) an additional 1% interest in each of the two entities through which each partner owns its interest in the joint venture. The Company’s partners will fund required capital until their aggregate investment is approximately 58% of all capital contributions; thereafter, the partners will fund required capital according to their percentage interests. (10)The Company’s partner will fund required capital until its aggregate investment is approximately 80% of all capital contributions; thereafter, the partners will fund required capital according to their percentage interests. 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. 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:
| December 31, 2022 |  | December 31, 2021
| (in thousands)
ASSETS |  |  |
Real estate and development in process, net (1) | $ | 6,537,554 |  |  | $ | 5,579,218 |
Other assets | 756,786 |  |  | 586,470 |
Total assets | $ | 7,294,340 |  |  | $ | 6,165,688 |
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY |  |  |
Mortgage and notes payable, net | $ | 4,022,746 |  |  | $ | 3,214,961 |
Other liabilities (2) | 716,271 |  |  | 652,135 |
Members’/Partners’ equity | 2,555,323 |  |  | 2,298,592 |
Total liabilities and members’/partners’ equity | $ | 7,294,340 |  |  | $ | 6,165,688 |
Company’s share of equity | $ | 1,238,929 |  |  | $ | 1,104,175 |
Basis differentials (3) | 391,556 |  |  | 341,751 |
Carrying value of the Company’s investments in unconsolidated joint ventures (4) | $ | 1,630,485 |  |  | $ | 1,445,926 |
_______________ (1)At December 31, 2022 and December 31, 2021, this amount included right of use assets - finance leases totaling approximately $248.9 million. At December 31, 2022 and December 31, 2021, this amount included right of use assets - operating leases totaling approximately $21.2 million and $22.3 million, respectively. (2)At December 31, 2022 and December 31, 2021, this amount included lease liabilities - finance leases totaling approximately $382.2 million and $385.5 million, respectively. At December 31, 2022 and December 31, 2021, this amount included lease liabilities - operating leases totaling approximately $30.5 million and $30.4 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. The majority of the Company’s basis differences are as follows:
| December 31, 2022 |  | December 31, 2021
Property | (in thousands)
Colorado Center | $ | 301,820 |  |  | $ | 304,776 |
200 Fifth Avenue | 94,497 |  |  | N/A
Gateway Commons | 47,808 |  |  | 51,009 |
Dock 72 | (98,980) |  |  | (50,051) |
These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities. (4)Investments with deficit balances aggregating approximately $85.4 million and $37.1 million at December 31, 2022 and December 31, 2021, respectively, are 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:
|  |  | Year ended December 31,
|  |  |  |  | 2022 |  | 2021 |  | 2020
|  |  |  |  | (in thousands)
Total revenue (1) |  |  |  |  | $ | 512,078 |  |  | $ | 383,649 |  |  | $ | 319,560 |
Expenses |  |  |  |  |  |  |  |  |
Operating |  |  |  |  | 198,632 |  |  | 158,498 |  |  | 144,347 |
Transaction costs |  |  |  |  | 837 |  |  | 470 |  |  | 1,027 |
Depreciation and amortization |  |  |  |  | 181,041 |  |  | 147,121 |  |  | 141,853 |
Total expenses |  |  |  |  | 380,510 |  |  | 306,089 |  |  | 287,227 |
Other income (expense) |  |  |  |  |  |  |  |  |
Loss from early extinguishment of debt |  |  |  |  | (1,327) |  |  | — |  |  | — |
Interest expense |  |  |  |  | (154,065) |  |  | (108,884) |  |  | (98,051) |
Unrealized gain on derivative instruments |  |  |  |  | 1,681 |  |  | — |  |  | — |
Gains on sales of real estate (2) |  |  |  |  | — |  |  | — |  |  | 11,737 |
Net loss |  |  |  |  | $ | (22,143) |  |  | $ | (31,324) |  |  | $ | (53,981) |
Company’s share of net loss |  |  |  |  | $ | (2,551) |  |  | $ | (10,254) |  |  | $ | (16,256) |
Gain on sale of investment (3) |  |  |  |  | — |  |  | 10,257 |  |  | — |
Impairment loss on investment (4) |  |  |  |  | (50,705) |  |  | — |  |  | (60,524) |
Basis differential (5) |  |  |  |  | (6,584) |  |  | (2,573) |  |  | (8,330) |
Loss from unconsolidated joint ventures |  |  |  |  | $ | (59,840) |  |  | $ | (2,570) |  |  | $ | (85,110) |
_______________ (1)Includes straight-line rent adjustments of approximately $62.9 million, $17.2 million and $(10.1) million for the years ended December 31, 2022, 2021 and 2020, respectively. (2)For the year ended December 31, 2020, represents the gain on sale of Annapolis Junction Building Eight and two land parcels. The gain on sale of real estate is included in Loss from Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations. (3)During the year ended December 31, 2021, the Company completed the sale of its 50% ownership interest in Annapolis Junction NFM LLC. The Company recognized a gain on sale of investment of approximately $10.3 million. (4)During the years ended December 31, 2022 and December 31, 2020, the Company recognized an other-than-temporary impairment loss on its investment in the unconsolidated joint venture that owns Dock 72 in Brooklyn, New York totaling approximately $50.7 million and $60.5 million, respectively. (5)Includes straight-line rent adjustments of approximately $0.5 million, $0.8 million and $1.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. Also includes net above-/below-market rent adjustments of approximately $0.4 million, $0.4 million and $0.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. On January 18, 2022, a joint venture in which the Company owns a 50% interest commenced the redevelopment of 651 Gateway located in South San Francisco, California. 651 Gateway is a premier workplace that is being converted to approximately 327,000 net rentable square feet of life sciences space. On February 2, 2022, a joint venture in which the Company owns a 55% interest commenced the development of the first phase of Platform 16, a premier workplace project located in San Jose, California, that is expected to contain approximately 1.1 million net rentable square feet upon completion. The first phase of the development projects includes the construction of an approximately 390,000 net rentable square foot premier workplace building and a below-grade parking garage. On March 28, 2022, a joint venture in which the Company owns a 20% interest refinanced with a new lender the debt secured by its Metropolitan Square property located in Washington, DC. At the time of the refinancing, the loan had an outstanding balance of approximately $294.1 million, bore interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.65%, plus (2) 4.75% per annum and was scheduled to mature on July 7, 2022, with two, one-year extension options, subject to certain conditions. There was no prepayment penalty associated with the prepayment of the previous mortgage loan. The joint venture recognized a loss from early extinguishment of debt totaling approximately $1.3 million due to the write-off of unamortized deferred financing costs. In conjunction with the refinancing, the joint venture settled its interest rate cap agreement, entered into in 2020, to limit its exposure to increases in the LIBOR rate. The new mortgage and mezzanine loans have an aggregate principal balance of $420.0 million, bear interest at a weighted average variable rate equal to the Secured Overnight Financing Rate (“SOFR“) plus 2.75% per annum and mature on April 9, 2024, with three, one-year extension options, subject to certain conditions. The joint venture distributed excess loan proceeds from the new mortgage and mezzanine loans totaling approximately $100.5 million, of which the Company’s share totaled approximately $20.1 million. On September 1, 2022, the joint venture entered into an interest rate cap agreement that capped SOFR at 4.50% per annum on a notional amount of $420.0 million through April 15, 2024. Metropolitan Square is a premier workplace with approximately 657,000 net rentable square feet located in Washington, DC. On April 18, 2022, a joint venture in which the Company owns a 50% interest extended the maturity date of the construction loan collateralized by its Hub50House property to June 19, 2022. At the time of the extension, the loan had an outstanding balance of approximately $176.5 million, bore interest at a variable rate equal to LIBOR plus 2.00% per annum and was scheduled to mature on April 19, 2022. On June 17, 2022, the joint venture repaid the existing construction loan and obtained a new mortgage loan. The new mortgage loan has a principal balance of $185.0 million, bears interest at a variable rate equal to SOFR plus 1.35% per annum and matures on June 17, 2032. At closing, the joint venture entered into interest rate swap contracts with notional amounts aggregating $185.0 million through April 10, 2032, resulting in a fixed rate of approximately 4.432% per annum through the expiration of the interest rate swap contracts. In conjunction with the new mortgage loan, the joint venture paid off the existing construction loan. At the time of the payoff of the construction loan, the outstanding balance of the loan totaled approximately $176.7 million. The joint venture distributed excess loan proceeds from the new mortgage loan totaling approximately $6.8 million, of which the Company’s share totaled approximately $3.4 million. Hub50House is a residential property that consists of approximately 320,000 net rentable square feet and 440 residential units located in Boston, Massachusetts. On May 13, 2022, the Company entered into a joint venture with a third party to own, operate and develop Reston Next Residential located in Reston, Virginia. Reston Next Residential is expected to consist of 508 residential rental units upon completion. The Company contributed approximately $11.3 million of improvements at closing and will contribute cash totaling approximately $3.5 million post closing for its 20% ownership interest in the joint venture. The partner contributed approximately $0.5 million of cash at closing and will contribute cash totaling approximately $58.7 million in the future for its 80% ownership interest in the joint venture. As a result of the partner’s deferred contribution, as of the acquisition date, the Company owned an approximately 96% interest in the joint venture. On May 13, 2022, the joint venture commenced development and entered into a construction loan collateralized by the property. The construction loan has a principal amount of up to $140.0 million, bears interest at a variable rate equal to SOFR plus 2.00% per annum and matures on May 13, 2026, with two, one-year extension options, subject to certain conditions. On June 16, 2022, the Company entered into a joint venture with a third party to own, operate and develop 751 Gateway, a laboratory building located in South San Francisco, California, that is expected to be approximately 231,000 net rentable square feet upon completion. 751 Gateway was previously part of the Company’s Gateway Commons joint venture. The Company contributed assets with an agreed upon value aggregating approximately $53.9 million and cash totaling approximately $2.6 million for its 49% ownership interest in the joint venture. The partner contributed assets with an agreed upon value aggregating approximately $53.9 million and cash totaling approximately $4.9 million for its 51% ownership interest in the joint venture. On August 8, 2022, a joint venture in which the Company owns a 50% interest modified the construction loan collateralized by its Dock 72 property located in Brooklyn, New York. At the time of the modification, the loan had an outstanding balance totaling approximately $198.4 million, a total commitment amount of $250.0 million, bore interest at a variable rate equal to LIBOR plus 3.35% per annum, and was scheduled to mature on December 18, 2023. The modified construction loan bore interest at a variable rate equal to (1) the greater of (x) SOFR or (y) 0.25% plus (2) 3.10% per annum, has a total commitment amount of approximately $198.4 million, and continued to mature on December 18, 2023. On December 22, 2022, the joint venture further modified the construction loan. The further modified construction loan bears interest at a variable rate equal to (1) the greater of (x) SOFR or (y) 0.25% plus (2) 2.50% per annum, has a total commitment amount of approximately $198.4 million, and matures on December 18, 2025. During December 2022, the Company recognized a non-cash impairment charge totaling approximately $50.7 million, which represented the other-than temporary decline in the fair value below the carrying value of the Company’s investment in the unconsolidated joint venture that owns Dock 72. The Company assessed the impairment and concluded that it was other than temporary. The Company determined that its valuation of the investment was categorized within Level 3 of the fair value hierarchy, as it utilized significant unobservable inputs in its assessment including an exit capitalization rate of 5.75%, a discount rate on the Company’s equity investment (the property is encumbered by mortgage debt) of 7.0% and leasing the currently available space over the period of 2023-2026. Dock 72 is a premier workplace with approximately 669,000 net rentable square feet. On September 9, 2022, a joint venture in which the Company owns an approximate 33.67% interest modified the mortgage loan collateralized by its Safeco Plaza property located in Seattle, Washington. At the time of the modification, the loan had an outstanding balance of approximately $250.0 million, bore interest at a variable rate equal to the greater of (x) 2.35% or (y) LIBOR plus 2.20% per annum, and was scheduled to mature on September 1, 2026. The modified mortgage loan bears interest at a variable rate equal to the greater of (x) 2.35% or (y) SOFR plus 2.32% per annum and continues to mature on September 1, 2026. In conjunction with the loan modification, the joint venture entered into an interest rate cap agreement that capped SOFR at 2.50% per annum on a notional amount of $250.0 million through September 1, 2023. Safeco Plaza is a premier workplace with approximately 765,000 net rentable square feet. On November 17, 2022, the Company acquired a 26.69% interest in the joint venture that owns 200 Fifth Avenue located in New York, New York, for a gross purchase price of approximately $280.2 million, which included $120.1 million of cash and the Company’s pro rata share of the outstanding loan secured by the property of $160.1 million. The mortgage loan bears interest at a variable rate equal to LIBOR plus 1.30% per annum and matures on November 24, 2028. The joint venture has interest rate swap contracts with notional amounts aggregating $600.0 million through June 2028, resulting in a fixed rate of approximately 4.34% per annum through the expiration of the interest rate swap contracts. 200 Fifth Avenue is a 14-story, approximately 855,000 square-foot, LEED Gold certified, premier workplace located in the Midtown South submarket. On December 7, 2022, a joint venture in which the Company owns a 50% interest modified the mortgage loan collateralized by its Market Square North property located in Washington, DC. At the time of the modification the loan had an outstanding balance of approximately $125.0 million, bore interest at a variable rate equal to (1) the greater of (x) LIBOR or (y) 0.50%, plus (2) 2.30% per annum, and was scheduled to mature on November 10, 2025, with one, one-year extension option subject to certain conditions. The modified mortgage loan bears interest at a variable rate equal to the greater of (1) the sum of (x) the “benchmark rate”, (y) 2.30% and (z) the adjustment applicable to such “benchmark rate” (approximately 0.11% for Term SOFR), or (2) 2.80%. For the period December 7, 2022 through March 9, 2023, the “benchmark rate” means LIBOR, and for the period after March 10, 2023, through the maturity date, Term SOFR. The modified mortgage loan continues to mature on November 10, 2025, with a one-year extension option subject to certain conditions. Market Square North is a premier workplace with approximately 418,000 net rentable square feet located in Washington, DC. On December 23, 2022, a joint venture in which the Company owns a 50% interest modified the construction loan collateralized by its The Hub on Causeway – Podium property located in Boston, Massachusetts. At the time of the modification, the loan had an outstanding balance of approximately $174.3 million, bore interest at a variable rate equal to LIBOR plus 2.25% per annum, and was scheduled to mature on September 6, 2023. The modified construction loan continues to bear interest at a variable rate equal to LIBOR plus 2.25% per annum for the period from December 23, 2022 through April 30, 2023. For the period from May 1, 2023 through the maturity date, the construction loan bears interest at a variable rate equal to Term SOFR plus 2.35% per annum. The modified construction loan continues to mature on September 6, 2023. The Hub on Causeway – Podium is a premier workplace with approximately 380,000 net rentable square feet located in Boston, Massachusetts. On December 23, 2022, a joint venture in which the Company owns a 50% interest modified the construction loan collateralized by its 100 Causeway Street property located in Boston, Massachusetts. At the time of the modification, the loan had an outstanding balance of approximately $337.6 million, bore interest at a variable rate equal to LIBOR plus 1.50% per annum, and was scheduled to mature on September 5, 2023, with two, one-year extension options, subject to certain conditions. The modified construction loan continues to bear interest at a variable rate equal to LIBOR plus 1.50% per annum for the period from December 23, 2022 through April 30, 2023. For the period from May 1, 2023 through the maturity date, the construction loan will bear interest at a variable rate equal to Term SOFR plus 1.60% per annum. The modified construction loan continues to mature on September 5, 2023, with two, one-year extension options, subject to certain conditions. 100 Causeway Street is a premier workplace with approximately 630,000 net rentable square feet located in Boston, Massachusetts.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
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