4. Investments in Unconsolidated Joint Ventures

The investments in unconsolidated joint ventures consist of the following at March 31, 2015:



Entity	Properties	Nominal % Ownership			Carrying Value of Investment (1)
					(in thousands)
Square 407 Limited Partnership	Market Square North	50.0	%		$	(7,345	)
The Metropolitan Square Associates LLC	Metropolitan Square	51.0	%		8,850
BP/CRF 901 New York Avenue LLC	901 New York Avenue	25.0	%	(2)	(12,907		)
WP Project Developer LLC	Wisconsin Place Land and Infrastructure	33.3	%	(3)	45,283
Annapolis Junction NFM, LLC	Annapolis Junction	50.0	%	(4)	25,935
540 Madison Venture LLC	540 Madison Avenue	60.0	%		67,809
500 North Capitol LLC	500 North Capitol Street, NW	30.0	%		(2,493		)
501 K Street LLC	1001 6th Street	50.0	%	(5)	42,735
Podium Developer LLC	North Station (Phase I - Air Rights)	50.0	%		5,576
					$	173,443

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(1)	Investments with deficit balances aggregating approximately $22.7 million have been reflected within Other Liabilities on the Company's Consolidated Balance Sheets.


(2)	The Company’s economic ownership has increased based on the achievement of certain return thresholds.


(3)	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, parking garage and infrastructure of the project.


(4)	The joint venture owns two in-service buildings, two buildings under construction and two undeveloped land parcels.


(5)	Under the joint venture agreement, the partner will be entitled to up to two additional payments from the venture based on increases in total square footage of the project above 520,000 square feet and achieving certain project returns at stabilization.

Certain of the Company’s unconsolidated 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 Company's unconsolidated joint ventures are as follows:



	March 31, 2015			December 31, 2014
	(in thousands)
ASSETS
Real estate and development in process, net	$	1,036,221		$	1,034,552
Other assets	224,398			264,097
Total assets	$	1,260,619		$	1,298,649
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY
Mortgage and notes payable	$	831,039		$	830,075
Other liabilities	38,500			34,211
Members’/Partners’ equity	391,080			434,363
Total liabilities and members’/partners’ equity	$	1,260,619		$	1,298,649
Company’s share of equity	$	201,037		$	209,828
Basis differentials (1)	(27,594		)	(27,786		)
Carrying value of the Company’s investments in unconsolidated joint ventures (2)	$	173,443		$	182,042

_______________

(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.


(2)	Investments with deficit balances aggregating approximately $22.7 million and $11.4 million at March 31, 2015 and December 31, 2014, respectively, have been reflected within Other Liabilities on the Company's Consolidated Balance Sheets.

The combined summarized statements of operations of the Company's unconsolidated joint ventures are as follows:



	For the three months ended March 31,
	2015		2014
	(in thousands)
Total revenue (1)	$	39,532	$	38,034
Expenses
Operating	16,275		15,464
Depreciation and amortization	9,071		9,092
Total expenses	25,346		24,556
Operating income	14,186		13,478
Other expense
Interest expense	7,980		8,012
Net income	$	6,206	$	5,466

Company’s share of net income (2)	$	14,642	$	2,625
Basis differential	192		191
Income from unconsolidated joint ventures	$	14,834	$	2,816

_______________


(1)	Includes straight-line rent adjustments of $1.6 million and $0.6 million for the three months ended March 31, 2015 and 2014, respectively. Includes net above-/below-market rent adjustments of $(0.1) million and $0.1 million for the three months ended March 31, 2015 and 2014, respectively.

(2)

During the three months ended March 31, 2015, the Company received a distribution of approximately $24.5 million, which was generated from the excess loan proceeds from the refinancing of 901 New York Avenue's mortgage loan to a new 10-year mortgage loan totaling $225.0 million. The Company’s allocation of income and distributions for the three months ended March 31, 2015 was not proportionate to its nominal ownership interest as a result of the achievement of specified investment return thresholds, as provided for in the joint venture agreement.