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INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | 9 Months Ended
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Sep. 30, 2022
Equity Method Investments and Joint Ventures [Abstract] |
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | 4. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES As of September 30, 2022, the Company held ownership interests in thirteen unconsolidated real estate ventures for a net aggregate investment balance of $546.9 million, which includes a negative investment balance in one unconsolidated real estate venture of $32.5 million, reflected within "Other liabilities" on the consolidated balance sheets. As of September 30, 2022, five of the real estate ventures owned properties that contained an aggregate of approximately 9.1 million net rentable square feet of office space; two real estate ventures owned 1.4 acres of land held for development; four real estate venture owned 7.5 acres of land in active development; one real estate venture owned a mixed used tower comprised of 250 apartment units and 0.2 million net rentable square feet of office/retail space; and one real estate venture owned a residential tower that contained 321 apartment units. The Company accounts for its interests in the unconsolidated real estate ventures, which range from 15% to 70%, using the equity method. Certain of the unconsolidated real estate ventures are subject to specified priority allocations of distributable cash. The Company earned management fees from the unconsolidated real estate ventures of $2.2 million and $2.1 million for the three months ended September 30, 2022 and 2021, respectively, and $6.2 million and $6.2 million for the nine months ended September 30, 2022 and 2021, respectively. The Company earned leasing commissions from the unconsolidated real estate ventures of $0.7 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $1.7 million and $2.6 million for the nine months ended September 30, 2022 and 2021, respectively. The Company had outstanding accounts receivable balances from the unconsolidated real estate ventures of $2.9 million and $2.5 million as of September 30, 2022 and December 31, 2021, respectively. The amounts reflected in the following tables (except for the Company’s share of equity in income) are based on the financial information of the individual unconsolidated real estate ventures. The following is a summary of the financial position of the unconsolidated real estate ventures in which the Company held interests as of September 30, 2022 and December 31, 2021 (in thousands):
| September 30, 2022 |  | December 31, 2021 |
Net property | $ | 1,980,666 |  |  | $ | 1,563,263 |  |
Other assets | 528,294 |  |  | 434,687 |  |
Other liabilities | 426,614 |  |  | 331,947 |  |
Debt, net | 1,228,937 |  |  | 956,668 |  |
Equity (a) | 853,409 |  |  | 709,335 |  |
(a)This amount does not include the effect of the basis difference between the Company's historical cost basis and the basis recorded at the real estate venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials occur from the impairment of investments, purchases of third party interests in existing real estate ventures and upon the transfer of assets that were previously owned by the Company into a real estate venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the real estate venture level. The following is a summary of results of operations of the unconsolidated real estate ventures in which the Company held interests during the three and nine month periods ended September 30, 2022 and 2021 (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenue | $ | 63,800 |  |  | $ | 53,991 |  |  | $ | 181,973 |  |  | $ | 160,576 |
Operating expenses | (32,735) |  |  | (29,650) |  |  | (92,998) |  |  | (87,266) |
Interest expense, net | (14,012) |  |  | (8,024) |  |  | (33,144) |  |  | (23,414) |
Depreciation and amortization | (28,064) |  |  | (23,038) |  |  | (77,274) |  |  | (73,431) |
Provision for impairment | — |  |  | (1,125) |  |  | — |  |  | (1,125) |
Net loss | $ | (11,011) |  |  | $ | (7,846) |  |  | $ | (21,443) |  |  | $ | (24,660) |
Ownership interest % | Various |  | Various |  | Various |  | Various
Company's share of net loss | $ | (6,092) |  |  | $ | (6,572) |  |  | $ | (15,531) |  |  | $ | (20,394) |
Basis adjustments and other | (168) |  |  | (62) |  |  | (273) |  |  | (404) |
Equity in loss of unconsolidated real estate ventures | $ | (6,260) |  |  | $ | (6,634) |  |  | $ | (15,804) |  |  | $ | (20,798) |
One Uptown Ventures On December 1, 2021, the Company entered into the One Uptown Ventures with affiliates of Canyon Partners Real Estate to commence development of One Uptown, a $328.4 million mixed-use project in Austin, Texas. One Uptown has been designed to deliver 348,000 square feet of Class-A workspace and 15,000 square feet of street-level retail space (through the "office" joint venture) and 341 apartment residences and a public park (through the "multifamily" joint venture) and a six-story parking garage to be shared by the two joint ventures. The Company's partner in each of the two joint ventures has agreed, subject to customary funding conditions, including closing of the applicable construction loan, to fund approximately $64.5 million of the combined project costs in exchange for a 50% preferred equity interest in each of the two joint ventures, with the Company retaining a 50% common equity interest in each. Under the terms of each of the joint venture agreements, the joint venture partner had no obligation to fund any portion of the applicable project costs until the closing of the applicable construction loan. This right prevented the Company from meeting the sale recognition criteria of ASC 606 until the applicable closings of the construction loans. On July 29, 2022, the One Uptown Ventures closed on two separate construction loans. The office joint venture closed on a $121.7 million construction loan which bears interest at SOFR plus 3.00% and the multifamily joint venture closed on an $85.0 million construction loan which bears interest at SOFR plus 2.45%, plus, in each case, a daily SOFR adjustment of 10 basis points. Both loans mature in July 2026. The Company has also provided a carry guarantee and limited payment guarantee up to 30% and 15% of the principal balance of the $121.7 million and $85 million construction loan, respectively. The Company subsequently recognized the formation of the joint ventures and deconsolidated the projects upon the closing of the loans. The Company has determined that the each of the One Uptown Ventures is a variable interest entity ("VIE"). As a result, the Company used the VIE model under the accounting standard for consolidation in order to determine whether to consolidate the One Uptown Ventures. Based upon each member's shared power over the activities of the One Uptown Ventures under the operating and related agreements, and the Company's lack of control over the development and construction phases of the project, the One Uptown Ventures are accounted for under the equity method of accounting. 3151 Market Street Venture On July 14, 2022, the Company formed a joint venture, with an unaffiliated third party, to develop an approximately 417,000 square foot life science/office building under a long-term ground lease located at 3151 Market Street in Philadelphia, Pennsylvania. The estimated project cost is approximately $308 million, and the joint venture partner has agreed, subject to customary funding conditions, to fund up to approximately $55 million of the project costs in exchange for a 45% preferred equity interest in the venture. The Company has agreed to provide a completion guaranty in connection with the development of the project. The Company has determined that the 3151 Market Street Venture is a variable interest entity ("VIE"). As a result, the Company used the VIE model under the accounting standard for consolidation in order to determine whether to consolidate the 3151 Market Street Venture. Based upon each member's shared power over the activities of the 3151 Market Street Venture under the operating and related agreements, and the Company's lack of control over the development and construction phases of the project, 3151 Market Street Venture is accounted for under the equity method of accounting. Cira Square Venture On March 17, 2022, the Company formed a joint venture, Cira Square REIT, LLC (“Cira Square Venture”), for the purpose of acquiring Cira Square, an office property located at 2970 Market Street in Philadelphia, Pennsylvania containing 862,692 rentable square feet for a gross purchase price of $383.0 million. The Company owns a 20% common equity interest in Cira Square Venture and provided an initial capital contribution of $28.6 million on the closing date. On the closing date, Cira Square Venture also obtained $257.7 million of third-party debt financing secured by the property. The loan bears interest at 3.50% over one-month term Secured Overnight Financing Rate ("SOFR") per annum and matures in March 2024. Based on the facts and circumstances at the formation of Cira Square Venture, the Company determined that the venture is not a variable interest entity ("VIE") in accordance with the accounting standard for the consolidation of VIEs. As a result, the Company used the voting interest model under the accounting standard for consolidation in order to determine whether to consolidate Cira Square Venture. Based upon each member's substantive participating rights over the activities of Cira Square Venture under the operating and related agreements, it is not consolidated by the Company, and is accounted for under the equity method of accounting.

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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 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
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