INVESTMENTS IN UNCONSOLIDATED ENTITIES

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

As of June 30, 2023 and December 31, 2022, the Company’s investments in unconsolidated entities were composed of the following (in thousands):


	Number of Properties as of June 30, 2023			Investment Balance as of
Joint Venture		Location	Ownership %	June 30, 2023			December 31, 2022
110 William Joint Venture	1	New York, New York	60% (1)	$	—	(2)	$	—
353 Sacramento Joint Venture	1	San Francisco, California	55.0%	26,290			45,173
Pacific Oak Opportunity Zone Fund I (3)	3	Various	46.0%	26,219			25,669
				$	52,509		$	70,842

_____________________

(1) On June 27, 2023, Pacific Oak SOR SREF III 110 William, LLC (the “110 William Joint Venture”) executed a lease for approximately 640,000 square feet of office space in the 110 William Joint Venture’s property. Additionally, in July 2023, the 110 William Joint Venture completed a debt and equity restructuring. Refer to Note 11 for further discussion.

(2) As of June 30, 2023, the Company’s investment in the 110 William Joint Venture was $0 due to historical distributions from the 110 William Joint Venture exceeding the Company’s book value and the Company suspended the equity method of accounting.

(3) The maximum exposure to loss as a result of the Company’s investment in the Pacific Oak Opportunity Zone Fund I is limited to the carrying amount of the investment.

Summarized financial information for investments in unconsolidated entities (in thousands):


	June 30, 2023		December 31, 2022

Assets:
Real estate held for investment, net	$	475,063	$	471,503
Total assets	541,670		546,142
Liabilities:
Notes payable related to real estate held for investment, net	498,579		490,302
Total liabilities	526,208		501,861
Total equity	$	15,462	$	44,281


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Total revenues	$	10,673	$	12,461	$	21,793	$	24,570
Operating loss	(13,718)		(6,807)		(27,753)		(12,060)
Net loss	$	(13,771)	$	(6,795)	$	(27,719)	$	(12,036)

The Company’s investments in unconsolidated entities are reviewed for impairment annually or when conditions exist that may indicate that the decrease in the carrying amount of the investment has occurred and is other-than-temporary. Triggering events or impairment indicators for the Company’s investments in unconsolidated entities may include recurring operating losses, change in economic environment, and weakening of the general market condition of the geographic area. Upon determination that an other-than-temporary impairment has occurred, an impairment is recognized in loss from unconsolidated entities, net to reduce the carrying amount of the investment to its estimated fair value.

During the three and six months ended June 30, 2023, the carrying amount of the Company’s investment in a joint venture was impaired by $14.8 million, primarily due to weakening market conditions of the geographic area. During three and six months ended June 30, 2022, no investments in unconsolidated entities were impaired.