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Investments in Unconsolidated Joint Ventures | 12 Months Ended
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Dec. 31, 2019
Equity Method Investments And Joint Ventures [Abstract] |
Investments in Unconsolidated Joint Ventures | 4.Investments in Unconsolidated Joint Ventures 111 Sutter Street On February 7, 2019, we completed the acquisition of 111 Sutter Street, a 293,000 square foot Class A office building in San Francisco, California. Simultaneously with closing, we brought in a joint venture partner to acquire 51.0% of the equity interest. We have retained the remaining 49.0% equity interest and manage and lease the asset. The purchase price was $227,000,000. In connection with the acquisition, the joint venture completed a $138,200,000 financing of the property. The four-year loan is interest only at LIBOR plus 215 basis points and has three one-year extension options. We began accounting for our investment in 111 Sutter Street, under the equity method, from the date of the acquisition. One Steuart Lane Prior to 2019, our consolidated Residential Development Fund (“RDF”), in which we have a 7.4% interest, owned a 25.0% economic interest in One Steuart Lane, a residential condo development project (the “project”) in San Francisco, California. Accordingly, prior to 2019, our economic interest in the project was 1.9%. In March 2019 and again in September 2019, RDF acquired an additional 10.0% economic interest in the project, in two separate transactions, for an aggregate of $19,110,000. Subsequent to these transactions, RDF economic interest in the project increased to 35.0% and our economic interest (based on our 7.4% ownership) increased to 2.6%. We continue to consolidate our 7.4% interest in RDF and reflect the 92.6% interest we do not own as “noncontrolling interests” in our consolidated financial statements. 55 Second Street On August 21, 2019, we acquired a 44.1% equity interest in a joint venture that owns 55 Second Street, a 384,000 square foot Class A office building in San Francisco, California. The transaction valued the property at $401,700,000. In connection with the acquisition, the joint venture assumed the existing $137,500,000 mortgage loan and upsized it by an additional $50,000,000. The $187,500,000 mortgage loan is interest only at a fixed rate of 3.88% and matures in October 2026. We began accounting for our investment in 55 Second Street, under the equity method of accounting, from the date of the acquisition. Market Center On December 11, 2019, we completed the acquisition of Market Center, a two-building Class A office complex comprising 747,000 square feet, in San Francisco, California, through a joint venture in which we own a 67.0% interest. The transaction valued the property at $722,000,000. In connection with the acquisition, the joint venture completed a $402,000,000 financing of the property for an initial term of five years, with two one-year extension options. The loan is interest only at LIBOR plus 150 basis points and was swapped for an all-in fixed rate of 3.07% over the initial term. We began accounting for our investment in Market Center, under the equity method of accounting, from the date of acquisition. The following tables summarize our investments in unconsolidated joint ventures as of the dates thereof and the income or loss from these investments for the periods set forth below.
(Amounts in thousands) |  | Paramount |  |  | As of December 31, |  |
Our Share of Investments: |  | Ownership |  |  | 2019 |  |  | 2018 |  |
712 Fifth Avenue (1) |  | 50.0% |  |  | $ | - |  |  | $ | - |  |
Market Center |  | 67.0% |  |  |  | 219,593 |  |  |  | - |  |
55 Second Street (2) |  | 44.1% |  |  |  | 95,384 |  |  |  | - |  |
111 Sutter Street |  | 49.0% |  |  |  | 41,519 |  |  |  | - |  |
60 Wall Street (2) |  | 5.0% |  |  |  | 19,777 |  |  |  | 22,353 |  |
One Steuart Lane (2) |  | 35.0% (3) |  |  |  | 69,536 |  |  |  | 52,923 |  | (4)
Oder-Center, Germany (2) |  | 9.5% |  |  |  | 3,371 |  |  |  | 3,587 |  |
Investments in unconsolidated joint ventures |  |  |  |  |  | $ | 449,180 |  |  | $ | 78,863 |  |
(Amounts in thousands) |  | For the Year Ended December 31, |
Our Share of Net (Loss) Income: |  | 2019 |  |  | 2018 |  |  | 2017 |
712 Fifth Avenue (1) |  | $ | 1,849 |  |  | $ | 3,901 |  |  | $ | 20,072 |
Market Center |  |  | (744 | ) | (5) |  | - |  |  |  | - |
55 Second Street (2) |  |  | (826 | ) | (5) |  | - |  |  |  | - |
111 Sutter Street |  |  | (4,394 | ) | (5) |  | - |  |  |  | - |
60 Wall Street (2) |  |  | (551 | ) |  |  | (518 | ) |  |  | (152 | )
One Steuart Lane (2) |  |  | (118 | ) |  |  | (18 | ) |  |  | 182 |
Oder-Center, Germany (2) |  |  | 78 |  |  |  | 103 |  |  |  | 83 |
(Loss) income from unconsolidated joint ventures |  | $ | (4,706 | ) |  | $ | 3,468 |  |  | $ | 20,185 |
| (1) | As of December 31, 2019, our basis in the partnership that owns 712 Fifth Avenue, was negative $19,648 resulting from distributions made to us in excess of our share of earnings recognized. Accordingly, we no longer recognize our proportionate share of earnings from the venture because we have no further obligation to fund additional capital to the venture. Instead, we only recognize earnings to the extent we receive cash distributions from the venture. |
| (2) | As of December 31, 2019, the carrying amount of our investment in 55 Second Street, 60 Wall Street, One Steuart Lane and Oder Center, Germany is greater than our share of equity in these investments by $583, $2,716, $974, $4,576, respectively, and primarily represents the unamortized portion of our capitalized acquisition costs. Basis differences allocated to depreciable assets are being amortized into “(loss) income from unconsolidated joint ventures” over the estimated useful life of the related assets. |
| (3) | Represents RDF’s economic interest in One Steuart Lane. |
| (4) | Includes a $7,086 basis adjustment which was recorded upon the adoption of ASU 2017-05 on January 1, 2018. |
| (5) | Represents our share of earnings from the date of acquisition through December 31, 2019. |
The following tables provide the combined summarized financial information of our unconsolidated joint ventures as of the dates and for the periods set forth below.
(Amounts in thousands) | As of December 31, |
Balance Sheets: | 2019 |  |  | 2018 |
Real estate, net | $ | 2,581,738 |  |  | $ | 1,236,989 |
Cash and cash equivalents and restricted cash |  | 75,071 |  |  |  | 50,834 |
Intangible assets, net |  | 172,041 |  |  |  | 97,658 |
Other assets |  | 36,218 |  |  |  | 40,718 |
Total assets | $ | 2,865,068 |  |  | $ | 1,426,199 |
Notes and mortgages payable, net | $ | 1,648,403 |  |  | $ | 887,882 |
Intangible liabilities, net |  | 38,377 |  |  |  | - |
Other liabilities |  | 65,759 |  |  |  | 22,310 |
Total liabilities |  | 1,752,539 |  |  |  | 910,192 |
Equity |  | 1,112,529 |  |  |  | 516,007 |
Total liabilities and equity | $ | 2,865,068 |  |  | $ | 1,426,199 |
(Amounts in thousands) | For the Year Ended December 31, |
Income Statements: | 2019 |  |  | 2018 |  |  | 2017 |
Revenues: |  |  |  |  |  |  |  |  |  |  |
Rental revenue | $ | 164,316 |  |  | $ | 140,653 |  |  | $ | 138,805 |
Fee and other income |  | 2,108 |  |  |  | 6,827 |  |  |  | 1,621 |
Total revenues |  | 166,424 |  |  |  | 147,480 |  |  |  | 140,426 |
Expenses: |  |  |  |  |  |  |  |  |  |  |
Operating |  | 68,491 |  |  |  | 53,417 |  |  |  | 51,390 |
Depreciation and amortization |  | 68,318 |  |  |  | 48,452 |  |  |  | 46,409 |
Total expenses |  | 136,809 |  |  |  | 101,869 |  |  |  | 97,799 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |
Interest and other income, net |  | 663 |  |  |  | 803 |  |  |  | 381 |
Interest and debt expense |  | (51,113 | ) |  |  | (39,406 | ) |  |  | (33,461 | )
Unrealized gain on interest rate swaps |  | - |  |  |  | - |  |  |  | 1,896 |
Net (loss) income before income taxes |  | (20,835 | ) |  |  | 7,008 |  |  |  | 11,443 |
Income tax expense |  | (16 | ) |  |  | (10 | ) |  |  | (2 | )
Net (loss) income | $ | (20,851 | ) |  | $ | 6,998 |  |  | $ | 11,441 |

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SX 210.3A-04) -URI http://asc.fasb.org/extlink&oid=116822174&loc=d3e355119-122828 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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