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Investments in Unconsolidated Joint Ventures
 12 Months Ended
Dec. 31, 2021
Investments In Unconsolidated Joint Ventures [Abstract]  
Investments In Unconsolidated Joint Ventures
6. Investments in Unconsolidated Joint Ventures
The investments in unconsolidated joint ventures consist of the following at December 31, 2021 and December 31, 2020:
 Carrying Value of Investment (1)
EntityPropertiesNominal % OwnershipDecember 31, 2021December 31, 2020
(in thousands)
Square 407 Limited PartnershipMarket Square North50.00 %$(1,205)$(3,766)
BP/CRF Metropolitan Square LLCMetropolitan Square20.00 %(15,356)(13,584)
901 New York, LLC901 New York Avenue25.00 %(2) (12,597)(12,264)
WP Project Developer LLC
Wisconsin Place Land and Infrastructure
33.33 %(3) 33,732 35,297 
Annapolis Junction NFM LLCAnnapolis Junction50.00 %(4) N/A13,463 
540 Madison Venture LLC540 Madison Avenue60.00 %(5) N/A122 
500 North Capitol Venture LLC500 North Capitol Street, NW30.00 %(7,913)(6,945)
501 K Street LLC
1001 6th Street
50.00 %(6) 42,576 42,499 
Podium Developer LLCThe Hub on Causeway - Podium50.00 %48,980 48,818 
Residential Tower Developer LLCHub50House50.00 %47,774 50,943 
Hotel Tower Developer LLC
The Hub on Causeway - Hotel Air Rights
50.00 %11,505 10,754 
Office Tower Developer LLC100 Causeway Street50.00 %57,687 56,312 
1265 Main Office JV LLC1265 Main Street50.00 %3,541 3,787 
BNY Tower Holdings LLCDock 72 50.00 %27,343 29,536 
BNYTA Amenity Operator LLC Dock 72 50.00 %1,069 1,846 
CA-Colorado Center Limited Partnership
Colorado Center50.00 %231,479 227,671 
7750 Wisconsin Avenue LLC 7750 Wisconsin Avenue 50.00 %61,626 58,112 
BP-M 3HB Venture LLC3 Hudson Boulevard25.00 %116,306 113,774 
SMBP Venture LPSanta Monica Business Park55.00 %156,639 145,761 
Platform 16 Holdings LPPlatform 1655.00 %(7)109,086 108,393 
Gateway Portfolio Holdings LLCGateway Commons50.00 %(8)327,148 336,206 
Rosecrans-Sepulveda Partners 4, LLCBeach Cities Media Campus50.00 %27,106 27,184 
Safeco Plaza REIT LLCSafeco Plaza33.67 %(9)72,545 N/A
360 PAS Holdco LLC360 Park Avenue South42.21 %(10)106,855 N/A
$1,445,926 $1,273,919 
 _______________
(1)Investments with deficit balances aggregating approximately $37.1 million and $36.6 million at December 31, 2021 and December 31, 2020, respectively, are included within Other Liabilities in the Company’s Consolidated Balance Sheets.
(2)The Company’s economic ownership has increased based on the achievement of certain return thresholds. At December 31, 2021 and December 31, 2020, the Company’s economic ownership was approximately 50%.
(3)The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.33% interest in the joint venture entity that owns the land, parking garage and infrastructure of the project.
(4)On March 30, 2021, the Company sold its interest in the joint venture to the partner. See below for additional details.
(5)The property was sold on June 27, 2019. As of December 31, 2020, the investment consisted of undistributed cash. All remaining cash has been distributed as of December 31, 2021 and the joint venture has been dissolved.
(6)Under the joint venture agreement for this land parcel, the partner will be entitled to up to two additional payments from the venture based on increases in total entitled square footage of the project above 520,000 square feet and achieving certain project returns at stabilization.
(7)This entity is a VIE (See Note 2).
(8)As a result of the partner’s deferred contribution, the Company owned an approximately 50% and 55% interest in the joint venture at December 31, 2021 and December 31, 2020, respectively.
(9)The Company’s ownership includes (1) a 33.0% direct interest in the joint venture, and (2) an additional 1% interest in each of the two entities (each, a “Safeco Partner Entity”) through which each partner owns its interest in the joint venture.
(10)The Company’s ownership includes (1) a 35.79% direct interest in the joint venture, (2) an additional 5.837% indirect ownership in the joint venture, and (3) an additional 1% interest in each of the two entities (each, a “360 Park Avenue South Partner Entity”) through which each partner owns its interest in the joint venture.
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. Under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments.
The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows: 
December 31, 2021December 31, 2020
 (in thousands)
ASSETS
Real estate and development in process, net (1)$5,579,218 $4,708,571 
Other assets586,470 531,071 
Total assets$6,165,688 $5,239,642 
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY
Mortgage and notes payable, net$3,214,961 $2,637,911 
Other liabilities (2)652,135 650,433 
Members’/Partners’ equity2,298,592 1,951,298 
Total liabilities and members’/partners’ equity$6,165,688 $5,239,642 
Company’s share of equity$1,104,175 $936,087 
Basis differentials (3)341,751 337,832 
Carrying value of the Company’s investments in unconsolidated joint ventures (4)$1,445,926 $1,273,919 
_______________
(1)At December 31, 2021 and December 31, 2020, this amount included right of use assets - finance leases totaling approximately $248.9 million. At December 31, 2021 and December 31, 2020, this amount included right of use assets - operating leases totaling approximately $22.3 million and $22.5 million, respectively.
(2)At December 31, 2021 and December 31, 2020, this amount included lease liabilities - finance leases totaling approximately $385.5 million and $388.7 million, respectively, and lease liabilities - operating leases totaling approximately $30.4 million and $29.0 million, respectively.
(3)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 result from impairments of investments, acquisitions through joint ventures with no change in control 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 majority of the Company’s basis differences are as follows:
December 31, 2021December 31, 2020
Property(in thousands)
Colorado Center$304,776 $307,328 
Gateway Commons51,009 51,875 
Dock 72(50,051)(52,243)
These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities.
(4)Investments with deficit balances aggregating approximately $37.1 million and $36.6 million at December 31, 2021 and 2020, respectively, are reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows: 
 Year ended December 31,
 202120202019
 (in thousands)
Total revenue (1)$383,649 $319,560 $322,817 
Expenses
Operating158,498 144,347 122,992 
Transaction costs470 1,027 1,000 
Depreciation and amortization147,121 141,853 102,296 
Total expenses306,089 287,227 226,288 
Other income (expense)
Interest expense(108,884)(98,051)(84,409)
Gains on sales of real estate (2)— 11,737 32,706 
Net income (loss)$(31,324)$(53,981)$44,826 
Company’s share of net income (loss)$(10,254)$(16,256)$24,423 
Gain on sale of investment (3)10,257 — — 
Impairment loss on investment (4)— (60,524)— 
Basis differential (2)(4)(5)(2,573)(8,330)22,169 
Income (loss) from unconsolidated joint ventures$(2,570)$(85,110)$46,592 
_______________ 
(1)Includes straight-line rent adjustments of approximately $17.2 million, $(10.1) million and $32.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.
(2)For the year ended December 31, 2020, represents the gain on sale of Annapolis Junction Building Eight and two land parcels. For the year ended December 31, 2019, represents the gain on sale of 540 Madison Avenue recognized by the joint venture. During 2008, the Company recognized an other-than-temporary impairment loss on its investment in the unconsolidated joint venture resulting in a basis differential between the carrying value of the Company’s investment in the joint venture and the joint venture’s basis in the assets and liabilities of the property. As a result of the historical basis difference, the Company recognized a gain on sale of real estate totaling approximately $47.2 million for the year ended December 31, 2019, which consists of its share of the gain on sale reported by the joint venture as well as an adjustment for the basis differential. The gain on sale of real estate is included in Income (loss) from Unconsolidated Joint Ventures in the Company’s Consolidated Statements of Operations.
(3)During the year ended December 31, 2021, the Company completed the sale of its 50% ownership interest in Annapolis Junction NFM LLC. The Company recognized a gain on sale of investment of approximately $10.3 million.
(4)During the year ended December 31, 2020, the Company recognized an other-than-temporary impairment loss on its investment in the unconsolidated joint venture that owns Dock 72 in Brooklyn, New York totaling approximately $60.5 million.
(5)Includes straight-line rent adjustments of approximately $0.8 million, $1.8 million and $2.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. Also includes net above-/below-market rent adjustments of approximately $0.4 million, $0.9 million and $1.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.
On February 25, 2021, a joint venture in which the Company had a 54% interest commenced the development of 751 Gateway, a laboratory building located in South San Francisco, California, that is expected to be approximately 231,000 net rentable square feet upon completion. 751 Gateway is the first phase of a multi-phase development plan at Gateway Commons. Upon the formation of the joint venture in 2020, the Company had an approximately 55% ownership interest in the joint venture as a result of the partner’s deferred contribution and the partner is obligated to fund all required capital until such time as the Company owns a 50% interest. On December 31, 2021, the Company had a 50% interest in the joint venture. In accordance with the terms of the joint venture agreement, the Company expects it will have a 49% interest in this property.
On March 30, 2021, the Company completed the sale of its 50% ownership interest in Annapolis Junction NFM LLC (the “Annapolis Junction Joint Venture”) to the joint venture partner for a gross sales price of $65.9 million. Net cash proceeds to the Company totaled approximately $17.8 million after repayment of the
Company's share of debt totaling approximately $15.1 million. The Company recognized a gain on sale of investment totaling approximately $10.3 million, which is included in Income (Loss) from Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Operations. In addition to net cash proceeds from the sale, the Company received a distribution of approximately $5.8 million of available cash. Annapolis Junction Buildings Six and Seven are Class A office properties totaling approximately 247,000 net rentable square feet. With the sale of the Company’s ownership interest in the Annapolis Junction Joint Venture, the Company no longer has any assets in Annapolis, Maryland.
On June 11, 2021, a joint venture in which the Company has a 50% interest partially placed in-service 100 Causeway Street, a Class A office project with approximately 634,000 net rentable square feet located in Boston, Massachusetts. On December 1, 2021, the property was fully placed in service.
On August 31, 2021, a joint venture in which the Company has a 50% interest extended the construction loan collateralized by its The Hub on Causeway – Podium property. At the time of the extension, the outstanding balance of the loan totaled approximately $174.3 million, bore interest at a variable rate equal to LIBOR plus 2.25% per annum and was scheduled to mature on September 6, 2021, with two, one-year extension options, subject to certain conditions. The extended loan continues to bear interest at a variable rate equal to LIBOR plus 2.25% per annum and matures on September 6, 2023. The Hub on Causeway – Podium is a retail and office property with approximately 382,000 net rentable square feet located in Boston, Massachusetts.
On September 1, 2021, the Company entered into a joint venture to acquire Safeco Plaza, a Class A office property located in Seattle, Washington, for a net purchase price of approximately $460.1 million, including $4.9 million of seller-funded leasing and capital costs. Safeco Plaza is a 50-story, approximately 765,000 net rentable square-foot, Class A office property. The acquisition was completed through a newly formed joint venture with two institutional partners. Each of the institutional partners invested approximately $71.9 million of cash for their respective 33.165% ownership interest in the joint venture. The Company invested approximately $72.6 million for their 33.67% interest in the joint venture and is providing customary operating, property management and leasing services to the joint venture. The Company’s ownership includes (1) a 33.0% direct interest in the joint venture, and (2) an additional 1% interest in each of the two entities (each a “Safeco Partner Entity”) through which each partner owns its interest in the joint venture. Subject to the occurrence of certain events and the joint venture achieving certain return thresholds, the Company is entitled to earn promote distributions. Some of the promote distributions may be payable in cash or, at the Company’s election, additional equity interest(s) in the Safeco Partner Entity(ies). The purchase price was funded with cash and proceeds from a new mortgage loan collateralized by the property. The mortgage loan has a principal amount of $250.0 million, bears interest at a variable rate equal to the greater of (x) 2.35% or (y) LIBOR plus 2.20% per annum and matures on September 1, 2026. The following table summarizes the allocation of the purchase price, including transaction costs, of Safeco Plaza joint venture at the date of acquisition (in thousands):
Land$81,343 
Building and improvements351,948 
Tenant improvements30,404 
In-place lease intangibles28,658 
Above-market lease intangibles301 
Below-market lease intangibles(32,542)
Net assets acquired$460,112 
The following table summarizes the estimated amortization of the acquired in-place lease intangibles and the acquired above/below-market lease intangibles as of December 31, 2021, for Safeco Plaza for each of the next five succeeding fiscal years (in thousands):
Acquired In-Place Lease IntangiblesAcquired Above-Market Lease IntangiblesAcquired Below-Market Lease Intangibles
2022$4,278 $49 $4,663 
20233,453 49 4,596 
20243,036 49 4,383 
20252,851 49 4,337 
20262,749 42 4,329 
On October 29, 2021, a joint venture in which the Company has a 50% interest completed and fully placed in-service 7750 Wisconsin Avenue, a Class A office project with approximately 733,000 net rentable square feet located in Bethesda, Maryland.
On December 14, 2021, the Company completed the acquisition of 360 Park Avenue South (See Note 3). On December 15, 2021, the Company entered into a joint venture with two institutional partners to own, operate and redevelop the property. The Company contributed the property and related loan for its aggregate (direct and indirect) 42.21% interest in the joint venture. The joint venture has commenced redevelopment activity, including modernizing building systems and creating amenities, collaborative spaces, and client spaces. The Company’s ownership includes (1) a 35.79% direct interest in the joint venture, (2) an additional 5.837% indirect ownership in the joint venture, and (3) an additional 1% interest in each of the “360 Park Avenue South Partner Entity through which each partner owns its interest in the joint venture. The Company’s partners will fund required capital until their aggregate investment is approximately 58% of all capital contributions; thereafter, the partners will fund required capital according to their percentage interests. Subject to the occurrence of certain events and the joint venture achieving certain return thresholds, the Company is entitled to earn promote distributions. Some of the promote distributions may be payable in cash or, at the Company’s election, additional equity interest(s) in the 360 Park Avenue South Partner Entity(ies). The mortgage loan has a principal amount of $220.0 million, of which $202.0 million was advanced at closing, bears interest at a variable rate equal to the Adjusted Term SOFR plus 2.40% and matures on December 14, 2024, with two one-year extension options, subject to certain conditions. The spread on the variable rate may be reduced, subject to certain conditions.