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Investments in Unconsolidated Real Estate Ventures

6 Months Ended

Jun. 30, 2024

Investments in Unconsolidated Real Estate Ventures

Investments in Unconsolidated Real Estate Ventures

4.Investments in Unconsolidated Real Estate Ventures

The following is a summary of the composition of our investments in unconsolidated real estate ventures:


		Effective
		Ownership
Real Estate Venture		Interest ⁽¹⁾		June 30, 2024			December 31, 2023

				(In thousands)
Prudential Global Investment Management ("PGIM") ⁽²⁾		50.0%		$	724		$	163,375
J.P. Morgan Global Alternatives ("J.P. Morgan") ⁽³⁾		50.0%			73,892			72,742
4747 Bethesda Venture		20.0%			11,672			13,118
Brandywine Realty Trust		30.0%			13,701			13,681
CBREI Venture ⁽⁴⁾		10.0%			174			180
Landmark Partners ⁽⁵⁾		18.0%			575			605
Other					305			580
Total investments in unconsolidated real estate ventures ⁽⁶⁾ ⁽⁷⁾				$	101,043		$	264,281

(1)	Reflects our effective ownership interests as of June 30, 2024. We have multiple investments with certain venture partners in the underlying real estate.

(2)	In February 2024, the venture sold its interest in Central Place Tower for a gross sales price of $325.0 million.

(3)	J.P. Morgan is the advisor for an institutional investor.

(4)	Excludes The Foundry for which we had a zero-investment balance and discontinued applying the equity method of accounting after September 30, 2023. In April 2024, the lender foreclosed on the loan secured by The Foundry and took possession of the property.

(5)	Excludes the L'Enfant Plaza Assets for which we have a zero-investment balance and discontinued applying the equity method of accounting after September 30, 2022.

(6)

Excludes (i) 10.0% subordinated interest in one commercial building, (ii) the Fortress Assets, (iii) the L'Enfant Plaza Assets and (iv) The Foundry. See Note 1 for more information. Also, excludes our interest in an investment in the real estate venture that owns 1101 17th Street for which we have discontinued applying the equity method of accounting since June 30, 2018 because we received distributions in excess of our contributions and share of earnings, which reduced our investment to zero; further, we are not obligated to provide for losses, have not guaranteed its obligations or otherwise committed to provide financial support.

(7)

As of June 30, 2024 and December 31, 2023, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $9.6 million and $8.7 million, resulting principally from our zero-investment balance in certain real estate ventures and capitalized interest.

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures. We recognized revenue, including expense reimbursements, of $4.1 million and $8.7 million for the three and six months ended June 30, 2024, and $5.6 million and $10.8 million for the three and six months ended June 30, 2023 for such services.

The following is a summary of disposition activity by our unconsolidated real estate ventures:

Proportionate

Real Estate

Gross

Share of

Venture

Ownership

Sales

Aggregate

Date Disposed

Partner

Assets

Percentage

Price

Gain ⁽¹⁾

(In thousands)

February 13, 2024

PGIM

Central Place Tower

50.0%

$

325,000

$

480

(1)	Additionally, we recognized $1.4 million related to certain previously recorded contingent liabilities, which were relieved in connection with the sale and included in "Gain on the sale of real estate, net" in our statement of operations.

The following is a summary of the debt of our unconsolidated real estate ventures:


		Weighted
		Average Effective
		Interest Rate ⁽¹⁾		June 30, 2024			December 31, 2023

				(In thousands)
Variable rate ⁽²⁾		5.73%		$	175,000		$	175,000
Fixed rate ⁽³⁾		4.13%			60,000			60,000
Mortgage loans ⁽⁴⁾					235,000			235,000
Unamortized deferred financing costs and premium / discount, net					(7,163)			(8,531)
Mortgage loans, net ^{(4) (5)}				$	227,837		$	226,469

(1)	Weighted average effective interest rate as of June 30, 2024.

(2)	Includes variable rate mortgages with interest rate cap agreements.

(3)	Includes variable rate mortgages with interest rates fixed by interest rate swap agreements.

(4)	Excludes mortgage loans related to the Fortress Assets, the L'Enfant Plaza Assets and The Foundry. In April 2024, the lender foreclosed on the loan secured by The Foundry and took possession of the property.

(5)	See Note 17 for additional information on guarantees of the debt of certain of our unconsolidated real estate ventures.

The following is a summary of financial information for our unconsolidated real estate ventures:


		June 30, 2024			December 31, 2023

		(In thousands)
Combined balance sheet information: ⁽¹⁾
Real estate, net		$	449,501		$	729,791
Other assets, net			66,540			137,771
Total assets		$	516,041		$	867,562

Mortgage loans, net		$	227,837		$	226,469
Other liabilities, net			27,633			47,251
Total liabilities			255,470			273,720
Total equity			260,571			593,842
Total liabilities and equity		$	516,041		$	867,562


		Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023

		(In thousands)
Combined income statement information: ⁽¹⁾
Total revenue		$	7,912		$	24,952		$	21,194		$	44,985
Operating income ⁽²⁾			1,414			5,088			5,938			7,579
Net loss ⁽²⁾			(2,511)			(2,214)			(1,867)			(3,934)

(1)

Excludes amounts related to the Fortress Assets and the L'Enfant Plaza Assets. Excludes combined balance sheet information for both periods presented and combined income statement information for the three and six months ended June 30, 2024 related to The Foundry as we discontinued applying the equity method of accounting after September 30, 2023.

(2)	Includes the gain on the sale of Central Place Tower of $894,000 for the six months ended June 30, 2024.