Investment in Real Estate

9 Months Ended

Sep. 30, 2024

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


	September 30, 2024		December 31, 2023
Land	$	1,244,284	$	1,220,339
Building and improvements	6,162,832		5,969,364
Tenant improvements	734,929		818,653
Furniture and fixtures	6,118		8,609
Property under development	169,922		195,931
INVESTMENT IN REAL ESTATE, AT COST	$	8,318,085	$	8,212,896

Acquisitions of Real Estate

The Company had no acquisitions of real estate during the nine months ended September 30, 2024.

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 over the life of the asset or its intended holding period. If impairment indicators are present for a specific real estate asset, we perform a recoverability test by comparing the carrying value of the asset group to the asset group’s estimated undiscounted future cash flows over the anticipated hold period. If the carrying value exceeds the estimated undiscounted future cash flows, we then compare the carrying value to the asset group’s estimated fair value and recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The future cash flows utilized in the evaluation of recoverability and the measurement of fair value are highly subjective and are based on assumptions regarding anticipated hold periods, future occupancy, future rental rates, future capital requirements, discount rates and capitalization rates, which are considered Level 2 and Level 3 inputs within the fair value hierarchy.

During the three and nine months ended September 30, 2024, the Company recorded impairment charges totaling $34.4 million related to the real estate assets of certain office properties. The impairment charges reflect a shortened expected holding period for the properties and a reduction in the carrying value of the properties to their estimated fair value based on non-binding purchase offers from third party buyers, which is considered a Level 2 measurement. The impairment charges are recorded within impairment loss on the Consolidated Statements of Operations.

The Company had no impairments of real estate during the nine months ended September 30, 2023.

Dispositions of Real Estate

The Company had no dispositions of real estate during the nine months ended September 30, 2024.

The following table summarizes information on dispositions completed during the nine months ended September 30, 2023. These properties were considered non-strategic to the Company’s portfolio:


Property	Segment	Date of Disposition	Square Feet (unaudited)	Sales Price(1) (in millions)		Gain on Sale(2) (in millions)
Skyway Landing	Office	2/6/2023	246,997	$	102.0	$	7.0
604 Arizona	Office	8/24/2023	44,260	$	32.5	$	10.3
3401 Exposition	Office	8/25/2023	63,376	$	40.0	$	5.8

__________________

1.Represents gross sales price before certain credits, prorations and closing costs.

2.Included within gain on sale of real estate on the Consolidated Statement of Operations.

Held for Sale

As of September 30, 2024, the Company classified its 195,121 square-foot (unaudited) Foothill Research Center office property located in the Palo Alto submarket as held for sale. The property was identified as a non-strategic asset to the Company’s portfolio. The following table summarizes the components of assets and liabilities associated with real estate held for sale as of September 30, 2024:




Investment in real estate, net	$	31,387
Straight-line rent receivables, net	964
Deferred leasing costs and intangible assets, net	1,328
Operating lease right-of-use asset	5,991
Prepaid expenses and other assets, net	265
ASSETS ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	39,935

LIABILITIES
Accounts payable, accrued liabilities and other	$	13,284
Operating lease liabilities	16,007
Intangible liabilities, net	228
Security deposits and prepaid rent	1,545
LIABILITIES ASSOCIATED WITH REAL ESTATE HELD FOR SALE	$	31,064