Investment in Real Estate

Acquisitions

During the first quarter of 2014, we acquired Merrill Place and 3402 Pico Blvd. The results of operations for each of these acquisitions are included in our consolidated statements of operations from the date of acquisition. The following table represents our purchase price accounting for each of these acquisitions:



	Merrill Place			3402 Pico Blvd.
Date of Acquisition	February 12, 2014			February 28, 2014		Total
Consideration paid
Cash consideration	$	57,034		$	18,546	$	75,580
Total consideration	$	57,034		$	18,546	$	75,580
Allocation of consideration paid
Investment in real estate, net	$	57,508		$	18,500	$	76,008
Above-market leases	173			—		173
Deferred leasing costs and lease intangibles, net	3,163			—		3,163
Below-market leases	(3,315		)	—		(3,315		)
Other (liabilities) asset assumed, net	(495		)	46		(449		)
Total consideration paid	$	57,034		$	18,546	$	75,580

During 2013, we acquired the following: 3401 Exposition, Pinnacle II, the Seattle portfolio and 1861 Bundy. The results of operations for each of these acquisitions are included in our consolidated statements of operations from the date of acquisition. The following table represents our purchase price accounting for each of these acquisitions:



	3401 Exposition		Pinnacle II			Seattle Portfolio			1861 Bundy
Date of Acquisition	May 22, 2013		June 14, 2013			July 31, 2013			September 26, 2013		Total
Consideration paid
Cash consideration	$	8,489	$	1,505		$	368,389		$	11,500	$	389,883
Notes receivable	4,000		—			—			—		4,000
Debt assumed	13,233		89,066			—			—		102,299
Non-controlling interest in consolidated real estate entity	—		45,704			—			—		45,704
Total consideration	$	25,722	$	136,275		$	368,389		$	11,500	$	541,886
Allocation of consideration paid
Investment in real estate, net	$	25,439	$	134,289		$	367,094		$	11,500	$	538,322
Deferred leasing costs and lease intangibles, net	—		12,637			21,619			—		34,256
Fair market unfavorable debt value	—		(5,820		)	—			—		(5,820		)
Below-market leases	—		(7,783		)	(14,666		)	—		(22,449		)
Other (liabilities) assets assumed, net	283		2,952			(5,658		)	—		(2,423		)
Total consideration paid	$	25,722	$	136,275		$	368,389		$	11,500	$	541,886

The table below shows the pro forma financial information for the nine months ended September 30, 2014 and 2013 as if these properties had been acquired as of January 1, 2013.



	Nine Months Ended September 30,
	2014		2013
Total revenues	$	186,592	$	152,419
Net income (loss)	$	22,663	$	(5,701	)

Acquisition - Note Receivable

On August 19, 2014, the Company entered into a loan participation agreement for a loan with a maximum principal of $140.0 million. The Company’s share was 23.77%, or $33.3 million. The note receivable is secured by a real estate property, has a balance of $28.5 million, bears interest at 11.0% and matures on August 18, 2016. The company earned a $0.4 million commitment fee as a result of this transaction. The balance as of September 30, 2014, net of the commitment fee, was $28.1 million and was classified as a Note Receivable on the Consolidated Balance Sheet.

Dispositions

During the quarter ended March 31, 2014, the Company began to market its Tierrasanta office property for sale

and therefore reclassified its assets and liabilities to held for sale as of June 30, 2014 and December 31, 2013. The property was sold on July 16, 2014. Refer to Note 13 for further details. Pursuant to ASU No. 2014-08, we will not be presenting the operating results in net income (loss) from discontinued operations.

On May 31, 2013, the Company entered into an agreement to sell its City Plaza property for approximately $56.0 million (before certain credits, prorations, and closing costs). The transaction closed on July 12, 2013. The transaction resulted in an approximately $5.6 million impairment loss, which was recorded in the second quarter of 2013. The Company reclassified City Plaza’s results of operations for the three and nine months ended September 30, 2014 and 2013 to discontinued operations on its consolidated statements of operations.

The following table sets forth the discontinued operations for the three and nine months ended September 30, 2014 and 2013 for City Plaza:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Total office revenues	$	—		$	242		$	—		$	4,204
Office operating expenses	(38		)	(252		)	(164		)	(1,807		)
Depreciation and amortization	—			—			—			(789		)
(Loss) income from discontinued operations	$	(38	)	$	(10	)	$	(164	)	$	1,608