Investment in Unconsolidated Ventures

9 Months Ended

Sep. 30, 2012

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN UNCONSOLIDATED VENTURES

INVESTMENT IN UNCONSOLIDATED VENTURES

As of September 30, 2012, the Company had an aggregate investment of approximately $179.0 million in 19 unconsolidated Real Estate Ventures. The Company formed or acquired interests in these ventures with unaffiliated third parties to develop or manage office properties or to acquire land in anticipation of possible development of office or residential properties. As of September 30, 2012, 15 of the Real Estate Ventures owned 54 office buildings that contain an aggregate of approximately 7.0 million net rentable square feet; three Real Estate Ventures owned 24 acres of undeveloped parcels of land; and one Real Estate Venture developed a hotel property that contains 137 rooms in Conshohocken, PA.

The Company accounts for its unconsolidated interests in its Real Estate Ventures using the equity method. The Company’s unconsolidated interests range from 20% to 65%, subject to specified priority allocations of distributable cash in certain of the Real Estate Ventures.

The amounts reflected in the following tables (except for the Company’s share of equity and income) are based on the historical financial information of the individual Real Estate Ventures. The Company does not record operating losses of the Real Estate Ventures in excess of its investment balance unless the Company is liable for the obligations of the Real Estate Venture or is otherwise committed to provide financial support to the Real Estate Venture.

The following is a summary of the financial position of the Real Estate Ventures as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012		December 31, 2011
Net property	$	925,227	$	846,643
Other assets	180,957		110,520
Other liabilities	55,592		48,798
Debt	740,885		745,830
Equity	309,707		162,535
Company’s share of equity (Company’s basis)	179,037		115,807

The following is a summary of results of operations of the Real Estate Ventures for the three and nine-month periods ended September 30, 2012 and 2011 (in thousands):

	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2012		2011		2012		2011
Revenue	$	42,772	$	36,345	$	120,644	$	108,743
Operating expenses	18,753		15,863		51,819		46,407
Interest expense, net	10,233		10,326		31,100		31,999
Depreciation and amortization	12,947		9,869		36,067		28,836
Net income (loss)	839		287		1,658		1,501
Company’s share of income (Company’s basis)	500		418		1,382		2,739

As of September 30, 2012, the Company had guaranteed repayment of approximately $0.6 million of loans on behalf of a Real Estate Venture. The Company, from time to time, also provides customary environmental indemnities in connection with construction and permanent financing both for its own account and on behalf of its Real Estate Ventures.

On September 19, 2012, the Company settled and was released from a previous agreement with a third party service provider ("the provider") who provided services related to Brandywine AI Ventures ("the venture"). The agreement between the two parties required that the Company pay the provider certain commissions and fees related to real estate acquisitions to be executed by the venture in the future. The Company paid a one-time termination fee of approximately $1.0 million to the provider in order to terminate and discharge any future obligations of commissions and fees associated with acquisitions by the venture. This fee is shown within the Company's consolidated statements of operations as "Loss on real estate venture formation" as the fee is associated with a contract entered into at the time of the formation of the venture. There were no comparable charges for the prior period.