4. Investments in Unconsolidated Joint Ventures

The investments in unconsolidated joint ventures consist of the following at September 30, 2012:


Entity	Properties	Nominal % Ownership
Square 407 Limited Partnership	Market Square North		50.0	%
The Metropolitan Square Associates LLC	Metropolitan Square		51.0	%
BP/CRF 901 New York Avenue LLC	901 New York Avenue		25.0	%(1)
WP Project Developer LLC	Wisconsin Place Land and Infrastructure		33.3	%(2)
RBP Joint Venture LLC	Eighth Avenue and 46th Street		50.0	%(3)
Boston Properties Office Value-Added Fund, L.P.	300 Billerica Road and Mountain View Research and Technology Parks		39.5	%(1)(4)
Annapolis Junction NFM, LLC	Annapolis Junction		50.0	%(5)
767 Venture, LLC	The General Motors Building		60.0	%
2 GCT Venture LLC	Two Grand Central Tower		60.0	%(6)
540 Madison Venture LLC	540 Madison Avenue		60.0	%
125 West 55^th Street Venture LLC	125 West 55^th Street		60.0	%
500 North Capitol LLC	500 North Capitol Street, NW		30.0	%(7)

(1)	The Company’s economic ownership can increase based on the achievement of certain return thresholds.

(2)	The Company’s wholly-owned entity that owns the office component of the project also owns a 33.3% interest in the entity owning the land and infrastructure of the project.

(3)	This property is not in operation and consists of assembled land.

(4)

The Company has a 39.5% interest in the Mountain View Research and Technology Park properties. 300 Billerica Road, in which the Company had a 25.0% interest, was sold on September 27, 2012. As of September 30, 2012, the Company’s investment in the Value-Added Fund included undistributed proceeds from the sale of 300 Billerica Road.

(5)	Comprised of one building, one building under construction and two undeveloped land parcels.

(6)	The property was sold on October 25, 2011. As of September 30, 2012, the investment is comprised of working capital and a portion of undistributed sale proceeds.

(7)	This property is under construction.

Certain of the Company’s joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures at an agreed upon fair value. Under these provisions, the Company is not compelled to purchase the interest of its outside joint venture partners.

The combined summarized balance sheets of the unconsolidated joint ventures are as follows:


	September 30, 2012			December 31, 2011
	(in thousands)
ASSETS
Real estate and development in process, net	$	4,504,954		$	4,542,594
Other assets		657,141			668,113

Total assets	$	5,162,095		$	5,210,707

LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY
Mortgage and notes payable	$	3,026,898		$	2,988,894
Other liabilities		791,110			854,257
Members’/Partners’ equity		1,344,087			1,367,556

Total liabilities and members’/partners’ equity	$	5,162,095		$	5,210,707

Company’s share of equity	$	793,166		$	799,479
Basis differentials(1)		(128,476	)		(129,757	)

Carrying value of the Company’s investments in unconsolidated joint ventures	$	664,690		$	669,722

(1)

This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials occur from impairment of investments and upon the transfer of assets that were previously owned by the Company into a joint venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level.

The combined summarized statements of operations of the joint ventures are as follows:


	For the three months ended September 30,						For the nine months ended September 30,
	2012			2011			2012		2011
	(in thousands)
Total revenue(1)	$	135,998		$	150,101		$	431,133	$	440,733
Expenses
Operating		42,298			44,584			120,451		129,698
Depreciation and amortization		39,291			46,773			123,869		145,653

Total expenses		81,589			91,357			244,320		275,351
Operating income		54,409			58,744			186,813		165,382
Other expense
Interest expense		56,521			57,699			167,792		172,467
Impairment loss		—			39,384			—		39,384

Income (loss) from continuing operations		(2,112	)		(38,339	)		19,021		(46,469	)
Gain on sale of real estate		990			—			990		—

Net income (loss)	$	(1,122	)	$	(38,339	)	$	20,011	$	(46,469	)

Company’s share of net income (loss)	$	(1,420	)	$	(23,231	)	$	10,591	$	(28,570	)
Basis differential		384			25,024			1,282		28,539
Elimination of inter-entity interest on partner loan		10,253			9,533			30,256		28,215

Income from unconsolidated joint ventures	$	9,217		$	11,326		$	42,129	$	28,184

(1)

Includes straight-line rent adjustments of $2.2 million and $6.7 million for the three months ended September 30, 2012 and 2011, respectively, and $9.3 million and $14.8 million for the nine months ended September 30, 2012 and 2011, respectively. Includes net below-market rent adjustments of $22.1 million and $28.3 million for the three months ended September 30, 2012 and 2011, respectively, and $70.6 million and $87.0 million for the nine months ended September 30, 2012 and 2011, respectively. Total revenue for the nine months ended September 30, 2012 includes termination income totaling approximately $19.6 million (of which the Company’s share is approximately $11.8 million) related to a lease termination with a tenant at the General Motors Building.

On July 25, 2012, a joint venture in which the Company has a 50% interest partially placed in-service Annapolis Junction Building Six, a Class A office property with approximately 120,000 net rentable square feet located in Annapolis, Maryland.

On September 27, 2012, the Company’s Value-Added Fund completed the sale of its 300 Billerica Road property located in Chelmsford, Massachusetts for approximately $12.2 million, including the assumption by the buyer of $7.5 million of mortgage indebtedness. 300 Billerica Road is an approximately 111,000 net rentable square foot office building. Net cash proceeds totaled approximately $4.3 million, of which the Company’s share was approximately $2.8 million, after the payment of transaction costs. The Company’s share of the net proceeds included approximately $2.4 million resulting from the Value-Added Fund’s repayment of a loan from the Company’s Operating Partnership. The Value-Added Fund recognized a gain on sale of real estate totaling approximately $1.0 million, of which the Company’s share totaled approximately $0.2 million and is included within income from unconsolidated joint ventures in the Company’s consolidated statements of operations.