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Investment in Real Estate | 12 Months Ended
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Dec. 31, 2016
Real Estate [Abstract] |
Investment in Real Estate | Investment in Real Estate Acquisitions During 2016, the Company acquired 11601 Wilshire, Hill7 and Page Mill Hill. During 2015, the Company completed the EOP Acquisition, and acquired 4th & Traction and 405 Mateo. The following table summarizes the information on our acquisitions completed in 2016 and 2015:
Property |  | Submarket |  | Date of Acquisition |  | Square Feet (unaudited) |  | Purchase Price(1) (in millions)
11601 Wilshire(2) |  | West Los Angeles |  | 7/1/2016 |  | 500,475 |  |  | $ | 311.0 |
Hill7(3) |  | South Lake Union |  | 10/7/2016 |  | 285,680 |  |  | 179.8 |
Page Mill Hill(4) |  | Palo Alto |  | 12/12/2016 |  | 182,676 |  |  | 150.0 |
Total acquisitions in 2016 |  |  |  |  |  | 968,831 |  |  | 640.8 |
EOP Acquisition(5) |  | Various |  | 4/1/2015 |  | 8,201,456 |  |  | 3,815.7 |
4th & Traction |  | Downtown Los Angeles |  | 5/22/2015 |  | 120,937 |  |  | 49.3 |
405 Mateo |  | Downtown Los Angeles |  | 8/17/2015 |  | 83,285 |  |  | 40.0 |
Total acquisitions in 2015 |  |  |  |  |  | 8,405,678 |  |  | $ | 3,905.0 |
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(1) | Represents purchase price before certain credits, prorations and closing costs.
(2) | Previously owned by an affiliate of Blackstone, the property has served as the Company’s corporate headquarters since its IPO. The Company funded this acquisition with proceeds from the unsecured revolving credit facility.
(3) | The Company purchased the property through a joint venture with the Canadian Pension Plan Investment Board. The Company owns 55% of the ownership interest in the consolidated joint venture. In conjunction with the acquisition, the joint venture closed a secured non-recourse loan in the amount of $101.0 million. Refer to Note 5 for details.
(4) | The Company funded this acquisition with proceeds from the unsecured revolving credit facility.
(5) | The EOP Acquisition consisted of 26 office assets and two development parcels located throughout the San Francisco Peninsula, Redwood Shores, Palo Alto, Silicon Valley and North San Jose submarkets.
The Company evaluated the Hill7 and Page Mill Hill acquisitions under the new framework for determining whether an integrated set of assets and activities meet the definition of a business (pursuant to ASU 2017-01). Substantially all of the fair value of the gross assets is concentrated in either a single identifiable asset or group of similar identifiable assets (e.g., operating property). Accordingly, Hill7 and Page Mill Hill did not meet the definition of a business and were accounted for as asset acquisitions. In previous reporting periods, the purchase price accounting for 11601 Wilshire was preliminary because the Company was in the process of evaluating the terms of certain contracts related to the Company’s interest in the land, which affected the identification and valuation of assets acquired and liabilities assumed. The fair value of the Company’s interest in the land has reflected below in the final purchase price accounting. If the measurement-period adjustment was made as of the acquisition date, the Company would have recognized an additional $33 thousand of depreciation and amortization expense in the third quarter of 2016. The following table represents the final aggregate purchase price accounting for each of the Company’s acquisitions completed in 2016:
| 11601 Wilshire |  | Hill7 |  | Page Mill Hill |  | Total
Investment in real estate, net | $ | 292,382 |  |  | $ | 173,967 |  |  | $ | 131,402 |  |  | $ | 597,751 |
Land interest(1) | 7,836 |  |  | — |  |  | — |  |  | 7,836 |
Above-market leases(2) | 167 |  |  | — |  |  | 307 |  |  | 474 |
Below-market ground leases(3) | 212 |  |  | — |  |  | 12,125 |  |  | 12,337 |
Deferred leasing costs and in-place intangibles(4) | 13,884 |  |  | 7,617 |  |  | 14,697 |  |  | 36,198 |
Below-market leases(5) | (6,562 | ) |  | (1,417 | ) |  | (8,636 | ) |  | (16,615 | )
Net asset and liabilities assumed | $ | 307,919 |  |  | $ | 180,167 |  |  | $ | 149,895 |  |  | $ | 637,981 |
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(1) | Represents the fair value of the Company’s interest in the land which is included in investment in unconsolidated entities in the Consolidated Balance Sheets.
(2) | Represents weighted-average amortization period of 5.4 years.
(3) | Represents weighted-average amortization period of 33.2 years.
(4) | Represents weighted-average amortization period of 5.8 years.
(5) | Represents weighted-average amortization period of 6.4 years.
Included in the Company’s consolidated financial statements for the year ended December 31, 2016 were revenues and net loss totaling $14.0 million and $3.5 million, respectively, from the acquisitions completed in 2016. The table below shows the pro forma financial information (unaudited) for the years ended December 31, 2016 and 2015 as if the acquisitions in 2016 had completed as of January 1, 2015:
| Year Ended December 31,
| 2016 |  | 2015
Total revenues | $ | 677,313 |  |  | $ | 572,482 |
Net income (loss) | 41,685 |  |  | (21,652 | )
The following table represents the final purchase price accounting for each of the Company’s acquisitions completed in 2015:
| EOP Northern California Portfolio |  | 4th & Traction |  | 405 Mateo |  | Total
Consideration paid |  |  |  |  |  |  |
Cash consideration | $ | 1,715,346 |  |  | $ | 49,250 |  |  | $ | 40,000 |  |  | $ | 1,804,596 |
Common stock | 87 |  |  | — |  |  | — |  |  | 87 |
Additional paid-in capital | 285,358 |  |  | — |  |  | — |  |  | 285,358 |
Non-controlling common units in the Operating Partnership | 1,814,936 |  |  | — |  |  | — |  |  | 1,814,936 |
Total consideration | 3,815,727 |  |  | 49,250 |  |  | 40,000 |  |  | 3,904,977 |
Allocation of consideration paid |  |  |  |  |  |  |
Investment in real estate, net | 3,610,039 |  |  | 49,250 |  |  | 40,000 |  |  | 3,699,289 |
Above-market leases(1) | 28,759 |  |  | — |  |  | — |  |  | 28,759 |
Below-market ground leases(2) | 52,065 |  |  | — |  |  | — |  |  | 52,065 |
Deferred leasing costs and in-place intangibles(3) | 225,431 |  |  | — |  |  | — |  |  | 225,431 |
Below-market leases(4) | (99,472 | ) |  | — |  |  | — |  |  | (99,472 | )
Above-market ground leases(5) | (1,095 | ) |  | — |  |  | — |  |  | (1,095 | )
Total consideration paid | $ | 3,815,727 |  |  | $ | 49,250 |  |  | $ | 40,000 |  |  | $ | 3,904,977 |
_____________
(1) | Represents weighted-average amortization period of 3.0 years.
(2) | Represents weighted-average amortization period of 27.7 years.
(3) | Represents weighted-average amortization period of 3.6 years.
(4) | Represents weighted-average amortization period of 4.3 years.
(5) | Represents weighted-average amortization period of 25.4 years.
Dispositions The following table summarizes the properties sold in 2016, 2015 and 2014. These properties were considered non-strategic to the Company’s portfolio:
Property |  | Date of Disposition |  | Square Feet (unaudited) |  | Sales Price(1) (in millions)
Bayhill Office Center |  | 1/14/2016 |  | 554,328 |  |  | $ | 215.0 |
Patrick Henry Drive |  | 4/7/2016 |  | 70,520 |  |  | 19.0 |
One Bay Plaza |  | 6/1/2016 |  | 195,739 |  |  | 53.4 |
12655 Jefferson |  | 11/4/2016 |  | 100,756 |  |  | 80.0 |
Total dispositions in 2016(2) |  |  |  | 921,343 |  |  | $ | 367.4 |
First Financial |  | 3/6/2015 |  | 223,679 |  |  | $ | 89.0 |
Bay Park Plaza |  | 9/29/2015 |  | 260,183 |  |  | 90.0 |
Total dispositions in 2015(3) |  |  |  | 483,862 |  |  | $ | 179.0 |
Tierrasanta |  | 7/16/2014 |  | 112,300 |  |  | $ | 19.5 |
Total disposition in 2014 |  |  |  | 112,300 |  |  | $ | 19.5 |
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(1) | Represents gross sales price before certain credits, prorations and closing costs.
(2) | Excludes the sale of an option to acquire land at 9300 Culver on December 6, 2016.
(3) | Excludes the disposition of 45% interest in 1455 Market Street office property on January 7, 2015.
The disposition of these properties resulted in a gain of $22.9 million, $30.5 million and $5.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. The gains on sale of real estate is included in the gains on sales in the Consolidated Statements of Operations. Also included in gains on sales in 2016 is a gain of $7.5 million related to a sale of an option to purchase land at 9300 Culver. Held for sale On December 30, 2016, the Company entered into an agreement to sell its 222 Kearny Street property for $51.8 million (before certain credits, prorations and closing costs). The Company determined that this property met the criteria to be classified as held for sale and reclassified the balances related to such property within the Consolidated Balance Sheets as of December 31, 2016 and 2015. 222 Kearny Street was subsequently sold on February 14, 2017. The following table summarizes the components of assets and liabilities associated with real estate held for sale as of:
|  | December 31, 2016 |  | December 31, 2015
ASSETS |  |  |  |
Investment in real estate, net |  | $ | 32,601 |  |  | $ | 344,202 |
Straight-line rent receivables, net |  | 777 |  |  | 2,641 |
Deferred leasing costs and lease intangible assets, net |  | 1,945 |  |  | 15,968 |
Other |  | 1,285 |  |  | 699 |
Assets associated with real estate held for sale |  | $ | 36,608 |  |  | $ | 363,510 |
LIABILITIES |  |  |  |
Accounts payable and accrued liabilities |  | $ | 2,918 |  |  | $ | 4,578 |
Lease intangible liabilities, net |  | 27 |  |  | 10,233 |
Other |  | 861 |  |  | 2,764 |
Liabilities associated with real estate held for sale |  | $ | 3,806 |  |  | $ | 17,575 |

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 210 -Section S99 -Paragraph 3 -Subparagraph (SX 210.6-06(1)) -URI http://asc.fasb.org/extlink&oid=6488278&loc=d3e604059-122996 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03(a)(1)(d)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04(c)(Schedule III)) -URI http://asc.fasb.org/extlink&oid=27047687&loc=d3e5864-122674 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -SubTopic 360 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-28) -URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03(10)(4)) -URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 235 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-24) -URI http://asc.fasb.org/extlink&oid=34714203&loc=d3e608456-123001 + Details
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