Investments In Real Estate Joint Ventures

12 Months Ended

Dec. 31, 2011

Investments In Real Estate Joint Ventures [Abstract]

Investments In Real Estate Joint Ventures

NOTE 3. INVESTMENTS IN REAL ESTATE JOINT VENTURES

As of December 31, 2010, our Predecessor had four joint venture arrangements with unrelated third parties. Our Predecessor owned from 25% to 80% of each of these ventures. For two of these ventures, our Predecessor was the general partner or managing member; however, the outside owners were either a co-general partner or had substantive participating rights, and our Predecessor could not make significant decisions without the outside owners' approval. Accordingly, we accounted for these investments under the equity method. Our Predecessor acted as the manager of the three properties owned by these two ventures and received fees in accordance with service contracts (Note 16).

For the joint venture that owned a mixed-use property in Honolulu, Hawaii, our Predecessor had an effective 80% limited ownership interest in the property; however, the outside owner was the managing member and managed the day-to-day business of the property. In addition, our Predecessor did not have "kick-out" rights relating to the outside owner's managing membership interest. Accordingly, we accounted for these investments under the equity method of accounting.

The properties owned by these unconsolidated joint ventures at December 31, 2010 were as follows:

Property	Type	Location
Solana Beach Towne Centre	Retail	Solana Beach, CA
Solana Beach Corporate Centre	Office	Solana Beach, CA
Fireman's Fund Headquarters	Office	Novato, CA
Waikiki Beach Walk	Mixed Use	Honolulu, HI

As noted above, as part of the Formation Transactions, we acquired the unrelated third party's interest in Solana Beach Towne Centre, Solana Beach Corporate Centre and Waikiki Beach Walk. We consolidated the operations of these properties subsequent to the Formation Transactions. The Predecessor's ownership interest in Fireman's Fund Headquarters was not acquired, and rather the ownership interests in this entity were distributed to its owners as part of the Formation Transactions. In addition, we no longer receive fee income from these ventures.

The following tables provide summarized operating results and the financial position of the unconsolidated entities (in thousands):

	Year Ended December 31,
	2010			2009
OPERATING RESULTS
Revenue	$	88,762		$	101,458
Expenses
Other operating expenses		34,607			41,293
Impairment loss (1)		38,465			—
Depreciation and amortization		29,012			33,066
Interest expense		29,835			33,130
Total expenses		131,919			107,489
Net loss	$	(43,157	)	$	(6,031	)
Our share of net loss	$	(4,406	)(2)	$	(4,865	)

(1) The venture recorded an impairment loss on the real estate property on the venture's financial statements during the year ended December 31, 2010. During 2008, we recorded an impairment of our equity method investment in the Fireman's Fund Headquarters real estate venture, as we determined that during 2008 the fair value of our equity method investment in the Fireman's Fund Headquarters was below our historical cost as a result of a reduction in real estate values due to the credit crisis that occurred during 2008. As a result, for the year ended December 31, 2010, we did not record our share of the impairment losses recorded on the venture's financial statements, as we believe our investment in the Fireman's Fund Headquarters joint venture at December 31, 2010 (adjusted for previously recorded impairment losses) was not impaired.

(2) Excludes the gain recorded on the acquisition of The Landmark at One Market of $4,297.

	Year Ended December 31, 2010
	(In thousands)
BALANCE SHEET
Real estate, net	$	456,714
Cash		14,995
Other assets		49,717
Total assets	$	521,426
Mortgages payable	$	459,922
Notes payable to affiliate		14,824
Other liabilities		20,982
Partners' capital		25,698
Total liabilities and partners' capital	$	521,426
Our share of unconsolidated debt	$	246,480
Our share of partners' capital	$	(10,457	)
Our investment in real estate joint ventures	$	39,816
Our distributions in excess of earnings of real estate joint ventures		(14,060	)
Our investment in real estate joint ventures, net	$	25,756

The difference between our investment in real estate ventures and our share of the underlying capital is attributable to the following items which are included in our investments in the real estate ventures: estimated impairment losses relating to our investments, the allocation of fair value in excess of historical cost recorded upon formation of our investment in the venture, capitalized interest, and intercompany profit elimination adjustments. These differences are recognized by us in our share of net income or loss and upon the sale of the real estate held by the real estate ventures.