Real Estate Partnerships

12 Months Ended

Dec. 31, 2011

Equity Method Investments and Joint Ventures [Abstract]

REAL ESTATE PARTNERSHIPS

REAL ESTATE PARTNERSHIPS

Federal/Lion Venture LP

We have a joint venture arrangement (the “Partnership”) with affiliates of a discretionary fund created and advised by ING Clarion Partners (“Clarion”). We own 30% of the equity in the Partnership and Clarion owns 70%. We hold a general partnership interest, however, Clarion also holds a general partnership interest and has substantive participating rights. We cannot make significant decisions without Clarion’s approval. Accordingly, we account for our interest in the Partnership using the equity method. As of December 31, 2011, the Partnership owned seven retail real estate properties. We are the manager of the Partnership and its properties, earning fees for acquisitions, dispositions, management, leasing, and financing. Intercompany profit generated from fees is eliminated in consolidation. We also have the opportunity to receive performance-based earnings through our Partnership interest. Accounting policies for the Partnership are similar to accounting policies followed by the Trust. The Partnership is subject to a buy-sell provision which is customary for real estate joint venture agreements and the industry. Either partner may initiate this provision at any time, which could result in either the sale of our interest or the use of available cash or borrowings to acquire Clarion’s interest. As of December 31, 2011, we have made total contributions of $42.1 million and received total distributions of $12.8 million.

The following tables provide summarized operating results and the financial position of the Partnership:

	Year Ended December 31,
	2011		2010		2009
OPERATING RESULTS
Revenue	$	19,289	$	18,639	$	19,109
Expenses
Other operating expenses	5,593		6,149		6,019
Depreciation and amortization	5,179		5,046		4,998
Interest expense	3,388		3,400		4,430
Total expenses	14,160		14,595		15,447
Net income	$	5,129	$	4,044	$	3,662
Our share of net income from real estate partnership	$	1,771	$	1,449	$	1,322

	December 31,
	2011		2010
	(In thousands)
BALANCE SHEETS
Real estate, net	$	178,693	$	181,565
Cash	3,035		3,054
Other assets	6,116		7,336
Total assets	$	187,844	$	191,955
Mortgages payable	$	57,376	$	57,584
Other liabilities	5,391		5,439
Partners’ capital	125,077		128,932
Total liabilities and partners’ capital	$	187,844	$	191,955
Our share of unconsolidated debt	$	17,213	$	17,275
Our investment in real estate partnership	$	34,352	$	35,504

Taurus Newbury Street JV II Limited Partnership

In May 2010, we formed Taurus Newbury Street JV II Limited Partnership (“Newbury Street Partnership”), a joint venture with an affiliate of Taurus Investment Holdings, LLC (“Taurus”), to acquire, operate and redevelop properties located primarily in the Back Bay section of Boston, Massachusetts. We held an 85% limited partnership interest in Newbury Street Partnership and Taurus held a 15% limited partnership interest and served as general partner. As general partner, Taurus was responsible for the operation and management of the properties, subject to our approval on major decisions. We evaluated the entity and determined that it was not a VIE. Accordingly, given Taurus’ role as general partner, we accounted for our interest in Newbury Street Partnership using the equity method. Accounting policies for the Newbury Street Partnership were similar to accounting policies followed by the Trust. Intercompany profit generated from interest income on loans we have provided to the partnership are eliminated in consolidation. All amounts contributed and advanced to Newbury Street Partnership are included in “Investment in real estate partnerships” in the consolidated balance sheet as of December 31, 2010 and our investment was $16.1 million at December 31, 2010. Due to the timing of receiving financial information from the general partner, our share of earnings was recorded one quarter in arrears. Our share of earnings in the consolidated statements of operations in 2011 and 2010 was income of less than $0.1 million and a loss of $0.4 million, respectively.

On May 26 2010, Newbury Street Partnership acquired the fee interest in two buildings, with 32,000 square feet of retail and office space, located on Newbury Street in Boston, Massachusetts for a purchase price of $17.5 million.  We contributed $7.8 million towards the acquisition and provided an $8.8 million interest only loan secured by the buildings. On May 26, 2011, Newbury Street Partnership acquired the fee interest in a 6,700 square foot building located on Newbury Street for a purchase price of $6.2 million. We contributed approximately $2.8 million towards the acquisition and provided a $3.1 million interest-only loan secured by the building. The $11.8 million loans bore interest at LIBOR plus 400 basis points and were to mature on May 25, 2012, subject to a one-year extension option.

On October 31, 2011, our Newbury Street Partnership sold its entire portfolio of three buildings for $44.0 million.  As part of the sale, we received $34.6 million of the net proceeds which included the repayment of our $11.8 million loans. Due to our earnings being recorded one quarter in arrears, we will recognize the gain on sale of $11.8 million in the first quarter 2012. The $11.8 million deferred gain is included in "other liabilities and deferred credits" on the balance sheet at December 31, 2011.