Real Estate Investments

9 Months Ended

Sep. 30, 2012

Real Estate [Abstract]

REAL ESTATE INVESTMENTS

REAL ESTATE INVESTMENTS

As of September 30, 2012 and December 31, 2011 the gross carrying value of the Company’s Properties was as follows (in thousands):

	September 30, 2012		December 31, 2011
Land	$	649,689	$	677,891
Building and improvements	3,530,214		3,631,388
Tenant improvements	480,386		483,801
	$	4,660,289	$	4,793,080

Brandywine/Toll Brothers Venture

On September 5, 2012, the Company formed a joint venture, TB-BDN Plymouth Apartments, L.P., (the "Venture"), with Toll Brothers, Inc. ("Toll Brothers"), a residential home builder. The Company and Toll Brothers each own a 50% interest in the Venture. The Venture owns a 20-acre parcel of land located in Plymouth Meeting, Pennsylvania, which the Company contributed to the Venture upon its formation. Concurrent with the Company's contribution of the aforementioned land parcel, Toll Brothers contributed $15.5 million of cash to the venture, equivalent to the fair value of the land parcel contributed by the Company. The cash contributed by Toll Brothers will be used to fund predevelopment costs to construct a 398 unit apartment complex.

Based on the facts and circumstances at Venture formation, the Company has determined that the Venture is not a VIE in accordance with the accounting standard for the consolidation of VIEs. As a result, the Company used the voting interest model under the accounting standard for consolidation to determine if it will consolidate the Venture. Based on the provisions within the joint venture agreement, the Company and Toll Brothers have significant participating rights and the Company does not have exclusive control over the development or construction phases of the project. Since each partner has significant participating rights, the land parcel contributed to the Venture was deconsolidated by the Company and is accounted for under the equity method of accounting. As of September 30, 2012, the carrying amount of the Company's equity investment in this Venture amounted to $15.2 million, with an associated $0.3 million permanent basis adjustment accounting for the difference between the fair value and carrying amount of the said land parcel. This basis adjustment will remain unamortized until the property is sold to a third party or the Venture is dissolved, in accordance with the accounting standard for equity method investments.

Acquisitions

On January 6, 2012, the Company acquired a vacant office property containing 154,392 net rentable square feet in Plymouth Meeting, Pennsylvania known as 660 West Germantown Pike for $9.1 million. The Company is currently redeveloping this property. The Company funded the acquisition price through an advance under its Credit Facility, since repaid with available corporate funds. The Company also recognized $0.1 million of acquisition related costs that have been capitalized on our consolidated balance sheet, in accordance with guidance on asset acquisitions.

Dispositions

On July 18, 2012, the Company sold a portfolio of 11 flex/office properties, totaling 466,719 square feet, in Exton, Pennsylvania, for a sales price of $52.7 million. These properties, collectively known as the Oaklands Corporate Center, were 81.6% occupied as of the date of sale.

On June 22, 2012, the Company sold Pacific Ridge Corporate Center, a 121,381 net rentable square feet, two-building office property located in Carlsbad, California, for a sales price of $29.0 million. The property was 83.7% occupied as of the sale date.

On March 22, 2012, the Company sold South Lake at Dulles Corner, a 268,240 net rentable square feet office property located in Herndon, Virginia, for a sales price of $91.1 million. The property was 100.0% occupied as of the date of sale.

On January 17, 2012, the Company sold 304 Harper Drive, a 32,978 net rentable square feet office property located in Moorestown, New Jersey, for a sales price of $3.0 million. The property was 90.1% occupied as of the date of sale.

Each of these sales is included in discontinued operations (see Note 10).