INVESTMENT IN UNCONSOLIDATED VENTURES

As of March 31, 2015, the Company held ownership interests in 17 unconsolidated Real Estate Ventures for an aggregate investment balance of $232.3 million, of which $233.5 million is included in assets and $1.2 million is included in other liabilities relating to the negative investment balance of one real estate venture. 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 March 31, 2015, 11 of the real estate ventures owned 65 office buildings that contain an aggregate of approximately 6.7 million net rentable square feet; one real estate venture owned three acres of undeveloped parcels of land; three real estate ventures owned 22.6 acres of land under development; one real estate venture owned a residential tower that contains 345 apartment units and one real estate venture owned 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 a Real Estate Venture 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 March 31, 2015 and December 31, 2014 (in thousands):



	March 31, 2015		December 31, 2014
Net property	$	1,294,503	$	1,281,282
Other assets	180,803		195,121
Other liabilities	59,829		68,481
Debt	969,322		965,077
Equity	446,155		442,845

Company’s share of equity (Company’s basis) (a) (b)	233,478		225,004

(a)

This amount includes the effect of the basis difference between the Company's historical cost basis and the basis recorded at the Real Estate Venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials occur from the impairment of investments, purchases of third party interests in existing Real Estate Ventures and upon the transfer of assets that were previously owned by the Company into a Real Estate Venture. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the Real Estate Venture level.


(b)	Does not include the negative investment balance of one real estate venture totaling $1.2 million as of March 31, 2015 and December 31, 2014, respectively, which is included in other liabilities.

The Company held interests in 17 Real Estate Ventures containing an aggregate of approximately 6.7 million net rentable square feet as of the three-month periods ended March 31, 2015 and 17 Real Estate Ventures containing an aggregate of approximately 5.7 million net rentable square feet as of the three-month period ended March 31, 2014. The following is a summary of results of operations of the Real Estate Ventures in which the Company had interests during these periods (in thousands):



	Three-month periods ended March 31,
	2015			2014
Revenue	$	46,109		$	34,385
Operating expenses	(18,533		)	(13,982		)
Interest expense, net	(9,846		)	(8,100		)
Depreciation and amortization	(19,124		)	(13,598		)
Net loss	$	(1,394	)	$	(1,295	)

Company’s share of income (Company’s basis)	$	131		$	242

DRA - PA Venture

On December 19, 2007, the Company formed G&I Interchange Office LLC, a real estate venture (the “Venture”) with G&I VI Investment Interchange Office LLC (“G&I VI”), an investment vehicle advised by DRA Advisors LLC. The Venture included interests in 29 office properties which were located in various counties in Pennsylvania, containing an aggregate of 1,611,961 net rentable square feet. In connection with the formation, the Company retained a 20.0% ownership interest in the Venture and transferred an 80.0% interest in the Venture to G&I IV.

On February 27, 2015, the Venture entered into a forbearance agreement with an unaffiliated third party lender because it will not repay the $174.2 million outstanding nonrecourse mortgage balance that matured on January 1, 2015. The forbearance agreement extended the maturity date of the mortgage loan to July 31, 2015 and contains, at the lender’s option, a 60-day extension option. The lender has the exclusive right to sell the properties to a third-party purchaser during the forbearance period. The net proceeds received from the sale of the properties will be provided to the lender. If the properties are not sold during the forbearance period the Venture’s assets will be foreclosed on by the lender.

As of the date of the forbearance agreement, the Company does not have an investment basis in the venture because of a basis adjustment recorded at formation. The Company is not obligated to fund any of the losses incurred by the Venture and, as a result, has not recognized losses in excess of its invested capital balance.

Austin Venture

On January 30, 2015, the Austin Venture closed on a mortgage loan with a non-affiliated institutional lender, and the proceeds of this loan were applied to repay in full the Company's $88.0 million short-term loan related to the acquisition of River Place. For further information regarding this acquisition, see Note 4, "Investment In Unconsolidated Ventures," included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Guarantees

As of March 31, 2015, the Company had provided guarantees on behalf of certain real estate ventures, consisting of (i) a $24.7 million payment guarantee on the construction loan for the project being undertaken by evo at Cira; (ii) a $3.2 million payment guarantee on the construction loan for the development project being undertaken by TB-BDN Plymouth Apartments; and (iii) a $0.5 million payment guarantee on a loan provided to PJP VII. In addition, during construction undertaken by real estate ventures, the Company has provided and expects to continue to provide cost overrun and completion guarantees, with rights of contribution among partners in the real estate ventures, as well as customary environmental indemnities and guarantees of customary exceptions to nonrecourse provisions in loan agreements. For additional information regarding these real estate ventures, see Note 4, "Investments in Unconsolidated Ventures," in notes to the audited financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.