Acquisitions (Tables)

9 Months Ended

Sep. 30, 2012

Office Properties Acquisitions [Member]

Acquired operating properties from unrelated third parties

During the nine months ended September 30, 2012, we acquired the twelve operating office properties listed below from unrelated third parties. Unless otherwise noted, we funded these acquisitions with proceeds from the Company's public offerings of common stock in February 2012 and August 2012 (see Note 7), borrowings under the unsecured line of credit (see Note 5), disposition proceeds (see Note 13), the assumption of existing debt and the issuance of common units of the Operating Partnership.



Property	Date of Acquisition	Number of Buildings	Rentable Square Feet	Occupancy as of September 30, 2012	Purchase Price (in millions)⁽¹⁾
4100-4700 Bohannon Drive
Menlo Park, CA	February 29, 2012	7	374,139	78.4%	$	162.5
701 and 801 N. 34th Street
Seattle, WA ⁽³⁾	June 1, 2012	2	308,407	99.4%	105.4
837 N. 34th Street
Seattle, WA ⁽²⁾	June 1, 2012	1	111,580	100.0%	39.2
10900 NE 4th Street
Bellevue, WA ⁽²⁾⁽⁴⁾	July 24, 2012	1	416,755	90.5%	186.1
6255 W. Sunset Boulevard
Los Angeles, CA ⁽⁵⁾	July 31, 2012	1	321,883	87.3%	78.8
Total		12	1,532,764		$	572.0

________________________


(1)	Excludes acquisition-related costs and includes assumed unpaid leasing commissions, tenant improvements, and other property related liabilities.


(2)	As of September 30, 2012, these properties are temporarily being held in separate VIEs to facilitate potential Section 1031 Exchanges (see Note 1).

(3)

We acquired these properties through the acquisition of the ownership interest of the bankruptcy remote LLC that owns the properties. In connection with this acquisition we also acquired cash of approximately $4.0 million, other assets of approximately $0.2 million and we assumed current liabilities of approximately $0.6 million and secured debt with an outstanding principal balance of $34.0 million and a premium of $1.7 million as a result of recording the debt at fair value at the acquisition date (see Note 5.)


(4)	In connection with this acquisition, we assumed secured debt with an outstanding principal balance of $83.6 million and a premium of $1.4 million as a result of recording

this debt at fair value on the acquisition date (see Note 5).

(5) As part of the consideration for this transaction, we issued 118,372 common units of the Operating Partnership "OP units" valued at $47.34, which was the Company's closing stock price on the NYSE on the acquisition date. In connection with this acquisition we also assumed secured debt with an outstanding principal balance of $53.9 million and a premium of $3.1 million as a result of recording this debt at fair value on the acquisition date (see Note 5). We also assumed $4.7 million of accrued liabilities in connection with this acquisition which are not included in the purchase price above.

Fair values of assets acquired and liabilities assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective acquisition dates:



	4100-4700 Bohannon Drive, Menlo Park, CA ⁽¹⁾		10900 NE 4th Street, Bellevue, WA ⁽¹⁾		All Other Acquisitions ⁽²⁾		Total
	(in thousands)
Assets
Land and improvements⁽³⁾	$	38,810	$	25,080	$	18,111	$	82,001
Buildings and improvements⁽⁴⁾	124,617		150,877		204,288		479,782
Cash and cash equivalents	—		—		3,973		3,973
Restricted cash	—		—		5,329		5,329
Deferred leasing costs and acquisition-related intangible assets⁽⁵⁾	9,470		16,469		29,790		55,729
Prepaid expenses and other assets	—		—		184		184
Total assets acquired	172,897		192,426		261,675		626,998

Liabilities
Deferred revenue and acquisition-related intangible liabilities⁽⁶⁾	10,380		4,940		19,250		34,570
Secured debt⁽⁷⁾	—		84,984		92,694		177,678
Accounts payable, accrued expenses and other liabilities	137		627		5,584		6,348
Total liabilities assumed	10,517		90,551		117,528		218,596
Net assets and liabilities acquired⁽⁸⁾	$	162,380	$	101,875	$	144,147	$	408,402

________________________


(1)	The purchase of 4100-4700 Bohannon Drive, Menlo Park, CA, and 10900 NE 4th Street, Bellevue, WA, represent the two largest acquisitions and approximately 61% of the total aggregate purchase price of the operating properties acquired during the nine months ended September 30, 2012.


(2)	The purchase price of all other acquisitions completed during the nine months ended September 30, 2012 were individually less than 5% and in aggregate less than 10% of the Company's total assets as of December 31, 2011.


(3)	In connection with the acquisitions of 701, 801, and 837 N. 34th Street, Seattle, WA, we assumed the lessee obligations under a ground lease with an initial expiration in December 2041. The ground lease obligation contains three 10-year extension options and one 45-year extension option (see Note 11 for additional information pertaining to this ground lease).


(4)	Represents buildings, building improvements and tenant improvements.

(5)

Represents in-place leases (approximately $41.1 million with a weighted average amortization period of 4.6 years), above-market leases (approximately $1.4 million with a weighted average amortization period of 3.8 years), leasing commissions (approximately $12.8 million with a weighted average amortization period of 3.4 years), and a below-market ground lease obligation (approximately $0.5 million with a weighted average amortization period of 59.6 years).


(6)	Represents below-market leases (approximately $33.5 million with a weighted average amortization period of 6.5 years) and an above-market ground lease obligation (approximately $1.1 million with a weighted average amortization period of 29.6 years).


(7)	Represents the fair value of the mortgage loans assumed, which includes an aggregate unamortized premium balance of approximately $6.2 million at the dates of acquisition (see Note 5).


(8)	Reflects the purchase price plus cash and restricted cash received, net of assumed secured debt, lease-related obligations and other accrued liabilities.

Development and Redevelopment Project Acquisitions [Member]

Business Acquisition [Line Items]

Acquired operating properties from unrelated third parties

During the nine months ended September 30, 2012, we acquired three development and redevelopment projects from unrelated third parties. Unless otherwise noted, we funded these acquisitions with proceeds from the Company's public offering of common stock in August 2012 (see Note 7) and borrowings under the unsecured line of credit (see Note 5).



Project	Date of Acquisition	Type	Purchase Price (in millions)
690 E. Middlefield Road
Mountain View, CA ⁽¹⁾	May 9, 2012	Development	$	74.5
333 Brannan Street
San Francisco, CA ⁽²⁾	July 20, 2012	Development	18.5
Columbia Square
Los Angeles, CA ⁽²⁾⁽³⁾	September 28, 2012	Development and Redevelopment	65.0
Total			$	158.0

________________________


(1)	The total purchase price for this 100% pre-leased acquisition was comprised of a cash purchase price of $74.5 million plus $9.5 million of assumed leasing commissions and other net accrued liabilities.


(2)	As of September 30, 2012, these properties are temporarily being held in separate VIEs to facilitate potential Section 1031 Exchanges (see Note 1).


(3)	In connection with this acquisition we also assumed $1.1 million of other accrued liabilities which are not included in the purchase price above.

Fair values of assets acquired and liabilities assumed

The related assets and liabilities of the acquired projects are included in the consolidated financial statements as of the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:



	Total
	(in thousands)
Assets
Undeveloped land and construction in progress	$	168,614
Prepaid expenses and other assets	1,300
Total assets acquired	169,914

Liabilities
Accounts payable, accrued expenses and other liabilities	7,227
Total liabilities assumed	7,227
Net assets and liabilities acquired ⁽¹⁾	$	162,687


(1)	Reflects the purchase price including assumed leasing commissions, net of assumed accrued liabilities.

- Definition

Tabular disclosure of a material business combination completed during the period, including background, timing, and recognized assets and liabilities. This table does not include leveraged buyouts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 141

-Paragraph 51

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 141R

-Paragraph F4

-Subparagraph e

-Appendix F

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 805

-SubTopic 10

-Section 50

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1392-128463

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 141R

-Paragraph 68

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 805

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1486-128463

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 141

-Paragraph 52

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details