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Investments in Unconsolidated Joint Ventures | 9 Months Ended
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Sep. 30, 2024
Equity Method Investments and 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 September 30, 2024 and December 31, 2023:
|  |  |  |  |  | Carrying Value of Investment (1)
Entity |  | Properties |  | Nominal % Ownership |  | September 30, 2024 |  | December 31, 2023
|  |  |  |  |  | (in thousands)
Square 407 Limited Partnership |  | Market Square North |  | 50.00 | % |  | $ | (12,042) |  |  | $ | (5,996) |
901 New York, LLC |  | 901 New York Avenue |  | 25.00 | % | (2) | — |  |  | (11,764) |
WP Project Developer LLC |  | Wisconsin Place Land and Infrastructure |  | 33.33 | % | (3) | 29,969 |  |  | 30,375 |
500 North Capitol Venture LLC |  | 500 North Capitol Street, NW |  | 30.00 | % |  | (11,630) |  |  | (10,253) |
501 K Street LLC |  | 1001 6th Street |  | 50.00 | % |  | 45,955 |  |  | 44,774 |
Podium Developer LLC |  | The Hub on Causeway - Podium |  | 50.00 | % |  | 42,916 |  |  | 45,201 |
Residential Tower Developer LLC |  | Hub50House |  | 50.00 | % |  | 38,116 |  |  | 40,235 |
Hotel Tower Developer LLC |  | The Hub on Causeway - Hotel Air Rights |  | 50.00 | % |  | 14,076 |  |  | 13,494 |
Office Tower Developer LLC |  | 100 Causeway Street |  | 50.00 | % |  | 56,055 |  |  | 57,660 |
1265 Main Office JV LLC |  | 1265 Main Street |  | 50.00 | % |  | 3,515 |  |  | 3,585 |
BNY Tower Holdings LLC |  | Dock 72 |  | 50.00 | % | (4) | (7,065) |  |  | (11,890) |
CA-Colorado Center, LLC |  | Colorado Center |  | 50.00 | % |  | 234,972 |  |  | 237,815 |
7750 Wisconsin Avenue LLC |  | 7750 Wisconsin Avenue |  | 50.00 | % |  | 48,814 |  |  | 50,064 |
BP-M 3HB Venture LLC |  | 3 Hudson Boulevard |  | 25.00 | % |  | 113,288 |  |  | 115,103 |
Platform 16 Holdings LP |  | Platform 16 |  | 55.00 | % |  | 55,381 |  |  | 45,564 |
Gateway Portfolio Holdings LLC |  | Gateway Commons |  | 50.00 | % |  | 393,679 |  |  | 376,834 |
Rosecrans-Sepulveda Partners 4, LLC |  | Beach Cities Media Campus |  | 50.00 | % |  | 27,051 |  |  | 27,034 |
Safeco Plaza REIT LLC |  | Safeco Plaza |  | 33.67 | % | (5) | 47,510 |  |  | 44,734 |
360 PAS Holdco LLC |  | 360 Park Avenue South |  | 71.11 | % | (6) | 69,538 |  |  | 42,988 |
PR II/BXP Reston Gateway LLC |  | Skymark - Reston Next Residential |  | 20.00 | % |  | 15,359 |  |  | 15,184 |
751 Gateway Holdings LLC |  | 751 Gateway |  | 49.00 | % |  | 98,882 |  |  | 93,411 |
200 Fifth Avenue JV LLC |  | 200 Fifth Avenue |  | 26.69 | % |  | 68,563 |  |  | 75,718 |
ABXP Worldgate Investments LLC |  | 13100 and 13150 Worldgate Drive |  | 50.00 | % |  | 18,247 |  |  | 17,546 |
|  |  |  |  |  | $ | 1,391,149 |  |  | $ | 1,337,416 |
_______________ (1)Investments with deficit balances aggregating approximately $30.7 million and $39.9 million at September 30, 2024 and December 31, 2023, respectively, are included within Other Liabilities in the Company’s Consolidated Balance Sheets. (2)At December 31, 2023, the Company’s economic ownership was approximately 50%. On January 8, 2024, the Company completed the acquisition of its joint venture partner’s 50% economic ownership interest for a gross purchase price of $10.0 million, as described in Note 3 and this Note 5. Since then, the Company accounts for its assets, liabilities and operations on a consolidated basis. (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)This property includes net equity balances from the amenity joint venture. (5)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. (6)The Company’s ownership includes (1) a 35.79% direct interest in the joint venture, (2) an additional 35.02% indirect ownership in the joint venture, and (3) an additional 1% interest in the entity through which the partner owns its interest in the joint venture. 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:
| September 30, 2024 |  | December 31, 2023
| (in thousands)
ASSETS |  |  |
Real estate and development in process, net (1) | $ | 5,756,008 |  |  | $ | 5,811,763 |
Other assets (2) | 651,956 |  |  | 682,291 |
Total assets | $ | 6,407,964 |  |  | $ | 6,494,054 |
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY |  |  |
Mortgage and notes payable, net | $ | 3,198,547 |  |  | $ | 3,351,873 |
Other liabilities (3) | 294,795 |  |  | 361,357 |
Members’/Partners’ equity | 2,914,622 |  |  | 2,780,824 |
Total liabilities and members’/partners’ equity | $ | 6,407,964 |  |  | $ | 6,494,054 |
Company’s share of equity | $ | 1,334,102 |  |  | $ | 1,278,483 |
Basis differentials (4) | 57,047 |  |  | 58,933 |
Carrying value of the Company’s investments in unconsolidated joint ventures (5) | $ | 1,391,149 |  |  | $ | 1,337,416 |
_______________ (1)At September 30, 2024 and December 31, 2023, this amount included right of use assets - operating leases totaling approximately $19.2 million and $20.1 million, respectively. (2)At September 30, 2024 and December 31, 2023, this amount included sales-type lease receivable, net totaling approximately $14.1 million and $13.9 million, respectively. (3)At September 30, 2024 and December 31, 2023, this amount included lease liabilities - operating leases totaling approximately $30.5 million. (4)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 Company’s basis differences include:
| September 30, 2024 |  | December 31, 2023
Property | (in thousands)
Colorado Center | $ | 296,758 |  |  | $ | 298,906 |
200 Fifth Avenue | 51,779 |  |  | 58,308 |
Gateway Commons | 51,009 |  |  | 48,971 |
Safeco Plaza | (29,032) |  |  | (29,678) |
360 Park Avenue South | (114,202) |  |  | (116,534) |
Dock 72 | (92,930) |  |  | (95,521) |
Platform 16 | (142,670) |  |  | (143,052) |
These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities. (5)Investments with deficit balances aggregating approximately $30.7 million and $39.9 million at September 30, 2024 and December 31, 2023, 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:
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023 |  |
| (in thousands)
Total revenue (1) | $ | 128,435 |  |  | $ | 153,551 |  |  | $ | 378,981 |  |  | $ | 469,745 |  |  |
Expenses |  |  |  |  |  |  |  |  |
Operating | 53,280 |  |  | 65,119 |  |  | 148,929 |  |  | 183,348 |  |  |
Transaction costs | 53 |  |  | 78 |  |  | 61 |  |  | 179 |  |  |
Depreciation and amortization | 41,082 |  |  | 49,840 |  |  | 118,901 |  |  | 151,051 |  |  |
Total expenses | 94,415 |  |  | 115,037 |  |  | 267,891 |  |  | 334,578 |  |  |
Other income (expense) |  |  |  |  |  |  |  |  |
Loss from early extinguishment of debt | — |  |  | — |  |  | — |  |  | (3) |  |  |
Interest expense | (45,244) |  |  | (60,737) |  |  | (132,106) |  |  | (176,786) |  |  |
Unrealized gain (loss) on derivative instruments | (19,172) |  |  | 10,242 |  |  | (8,212) |  |  | 14,089 |  |  |
Net loss | $ | (30,396) |  |  | $ | (11,981) |  |  | $ | (29,228) |  |  | $ | (27,533) |  |  |
Company’s share of net loss | $ | (9,319) |  |  | $ | (4,476) |  |  | $ | (9,105) |  |  | $ | (10,739) |  |  |
Gain on investment (2) | — |  |  | 35,756 |  |  | — |  |  | 35,756 |  |  |
Gain on sale / consolidation | — |  |  | — |  |  | 21,696 |  |  | — |  |  |
Impairment losses on investments (3) | — |  |  | (272,603) |  |  | — |  |  | (272,603) |  |  |
Basis differential (4) | 2,308 |  |  | (6,233) |  |  | (6,215) |  |  | (14,207) |  |  |
Income (loss) from unconsolidated joint ventures | $ | (7,011) |  |  | $ | (247,556) |  |  | $ | 6,376 |  |  | $ | (261,793) |  |  |
_______________ (1)Includes straight-line rent adjustments of approximately $2.6 million and $7.7 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $16.5 million and $20.9 million for the nine months ended September 30, 2024 and 2023, respectively. (2)During the three months ended September 30, 2023, the Company completed a restructuring of its ownership in Metropolitan Square. (3)During the three and nine months ended September 30, 2023, the Company recognized an other-than-temporary impairment loss on its investments in Platform 16, 360 Park Avenue South, 200 Fifth Avenue and Safeco Plaza aggregating approximately $272.6 million. (4)Includes depreciation and amortization of approximately $3.9 million and $4.1 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $6.8 million and $7.8 million for the nine months ended September 30, 2024 and 2023, respectively. Includes unrealized loss on derivative instruments of approximately $5.1 million and $2.7 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $4.9 million and $6.6 million for the nine months ended September 30, 2024 and 2023, respectively. Includes straight-line rent adjustments of approximately $0.3 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $1.0 million and $1.1 million for the nine months ended September 30, 2024 and 2023, respectively. Also includes net above-/below-market rent adjustments of approximately $0.2 million for the three months ended September 30, 2024 and 2023, and approximately $0.6 million for the nine months ended September 30, 2024 and 2023. On January 2, 2024, a joint venture in which the Company has a 50% interest partially placed in-service 651 Gateway, an approximately 327,000 net rentable square foot laboratory/life sciences project in South San Francisco, California. On January 8, 2024, the Company acquired its joint venture partner’s 50% economic ownership interest in the joint venture that owns 901 New York Avenue, located in Washington, DC, for a gross purchase price of $10.0 million in cash (See Note 3). Prior to the acquisition, the Company had a 50% economic ownership interest in the joint venture and accounted for it under the equity method of accounting. The acquisition resulted in the Company having full ownership of the joint venture such that the Company now accounts for its assets, liabilities, and operations on a consolidated basis in its financial statements instead of under the equity method of accounting. As a result, the Company recognized a gain on consolidation of approximately $21.8 million. On February 6, 2024, a joint venture in which the Company owns a 25% interest extended the maturity date of the loan collateralized by its 3 Hudson Boulevard property. At the time of the extension, the loan had an outstanding principal balance totaling $80.0 million and was scheduled to mature on February 9, 2024. The extended loan was scheduled to mature on May 9, 2024. On May 8, 2024, the loan was extended 30 days and on June 7, 2024, the loan was extended an additional 60 days. The extended loan continued to bear interest at a variable rate equal to Term SOFR plus approximately 3.61% per annum and was scheduled to mature on August 7, 2024. As of September 30, 2024, the loan was in a maturity default and had an outstanding balance, including accrued and unpaid interest and default interest of approximately $116.0 million. The Company is the lender of the loan and the loan is reflected as Related Party Note Receivables, Net on the Company’s Consolidated Balance Sheets. 3 Hudson Boulevard consists of land and improvements held for future development located in New York, New York. On February 9, 2024, a joint venture in which the Company owns a 50% interest exercised an option to extend the maturity date of the construction loan collateralized by its 7750 Wisconsin Avenue property. The construction loan had a total commitment amount of approximately $252.6 million. The extended loan continues to bear interest at a variable rate equal to Term SOFR plus 1.35% per annum and matures on April 26, 2025. At the time of the extension, the loan had an outstanding balance totaling approximately $251.6 million and was scheduled to mature on April 26, 2024. 7750 Wisconsin Avenue is an office property with approximately 736,000 net rentable square feet located in Bethesda, Maryland. On July 12, 2024, a joint venture in which the Company has a 20% ownership interest partially placed in-service Skymark, a luxury residential property located in Reston, Virginia, that consists of 508 residential units aggregating approximately 417,000 net rentable square feet across a five-story low-rise building and an iconic 39-story tower, which is one of the tallest buildings in Northern Virginia. On July 18, 2024, a joint venture in which the Company has a 50% ownership interest extended by one year the maturity date of its loan collateralized by 100 Causeway Street. At the time of the extension, the loan had an outstanding balance totaling approximately $333.6 million, bore interest at Term SOFR plus 1.48% per annum, and was scheduled to mature on September 5, 2024. Following the extension, the loan will continue to bear interest at Term SOFR plus 1.48% per annum, and is scheduled to mature on September 5, 2025. 100 Causeway Street is an approximately 634,000 net rentable square foot office property located in Boston, Massachusetts. On August 7, 2024, a joint venture in which the Company has a 71.11% ownership interest partially placed in-service 360 Park Avenue South, a 20-story, office building with ground floor retail located in New York City, New York, aggregating approximately 450,000 net rentable square feet.

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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/recommendedDisclosureRef -Topic 740 -SubTopic 323 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478156/740-323-50-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481687/323-10-50-3 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481687/323-10-50-3 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 323 -Publisher FASB -URI https://asc.fasb.org/323/tableOfContent + Details
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