Investment in Real Estate

6 Months Ended

Jun. 30, 2022

The following table summarizes the Company’s investment in real estate, at cost as of:


	June 30, 2022		December 31, 2021
Land	$	1,395,528	$	1,313,385
Building and improvements	6,277,927		6,241,254
Tenant improvements	813,741		786,991
Furniture and fixtures	10,940		14,020
Property under development	64,204		5,827
INVESTMENT IN REAL ESTATE, AT COST	$	8,562,340	$	8,361,477

Acquisitions of Real Estate

On April 27, 2022, the Company completed its previously announced acquisition of Washington 1000, a fully entitled office development site in Seattle, Washington for a total purchase price of $85.6 million, before certain credits, prorations and closing costs.

On May 19, 2022, the Company purchased a parcel of land at Sunset Gower Studios that was previously encumbered by a ground lease for a total purchase price of $22.0 million, before certain credits, prorations and closing costs.

The following table represents the Company’s final purchase price accounting for the Washington 1000 and Sunset Gower Studios land acquisitions:


	Washington 1000		Sunset Gower Studios Land
TOTAL ACQUISITION COST(1)	$	86,313	$	22,156

Allocation of acquisition cost
Land	$	59,987	$	22,156
Building	11,053		—
Parking easement(2)	15,273		—
TOTAL	$	86,313	$	22,156

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1.Includes capitalized transaction-related expenses.

2.Parking easement has an indefinite useful life and is recorded in deferred leasing costs and intangible assets, net on the Consolidated Balance Sheet.

Impairment of Long-Lived Assets

The Company assesses the carrying value of real estate assets and related intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with GAAP. Impairment losses are recorded on real estate assets held for investment when indicators of impairment are present and the future

undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. The Company recognizes impairment losses to the extent the carrying amount exceeds the fair value, based on Level 1 or Level 2 inputs.

During the three and six months ended June 30, 2022, the Company recorded $3.3 million and $15.3 million, respectively, of impairment charges related to the tangible and intangible assets of its Del Amo office property, which is classified as held for sale as of June 30, 2022 and December 31, 2021, due to a reduction in the estimated fair value of the property. The estimated fair value of $2.75 million was based on the estimated sales price of the property, which is classified within Level 2 of the fair value hierarchy. The Company did not recognize impairment charges during the six months ended June 30, 2021.

Dispositions of Real Estate

The Company had no dispositions of real estate during the six months ended June 30, 2022 and 2021.

Held for Sale

The Company had four properties classified as held for sale as of June 30, 2022 and December 31, 2021. The properties were identified as non-strategic assets to the Company’s portfolio and are included in the Company’s Office segment.

The following table summarizes the components of assets and liabilities associated with real estate held for sale as of June 30, 2022:


	Northview Center		Skyway Landing		Del Amo		6922 Hollywood
ASSETS
Investment in real estate, net	$	40,532	$	89,922	$	2,371	$	91,402
Accounts receivable, net	179		99		—		52
Straight-line rent receivables, net	1,047		613		—		4,526
Deferred leasing costs and intangible assets, net	1,070		501		330		2,006
Prepaid expenses and other assets, net	19		44		8		120
ASSETS ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	42,847	$	91,179	$	2,709	$	98,106

LIABILITIES
Accounts payable, accrued liabilities and other	$	94	$	273	$	14	$	858
Intangible liabilities, net	—		—		—		96
Security deposits and prepaid rent	913		408		—		416
LIABILITIES ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	1,007	$	681	$	14	$	1,370

The following table summarizes the components of assets and liabilities associated with real estate held for sale as of December 31, 2021:


	Northview Center		Skyway Landing		Del Amo		6922 Hollywood
ASSETS
Investment in real estate, net	$	40,338	$	89,873	$	15,213	$	91,353
Accounts receivable, net	95		142		—		103
Straight-line rent receivables, net	901		1,659		—		4,714
Deferred leasing costs and intangible assets, net	751		450		2,742		1,999

Prepaid expenses and other assets, net	—		—		—		187
ASSETS ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	42,085	$	92,124	$	17,955	$	98,356

LIABILITIES
Accounts payable, accrued liabilities and other	$	184	$	273	$	12	$	1,372

Intangible liabilities, net	—		—		—		96
Security deposits and prepaid rent	395		1,205		—		361
LIABILITIES ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	579	$	1,478	$	12	$	1,829