INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES (Tables)

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Summary of Financial Position

The following is a summary of the financial position of the Real Estate Ventures as of December 31, 2019 and December 31, 2018 (in thousands):

	December 31, 2019
	MAP Venture	Brandywine-AI Venture LLC	Other	Total
Net property	192,582	24,651	617,134	$	834,367
Other assets (a)	256,453	3,000	82,549	342,002
Other liabilities (a)	266,200	824	23,047	290,071
Debt, net (b)	181,525	—	403,543	585,068
Equity (c)	1,310	26,827	273,093	301,230

	December 31, 2018
	MAP Venture	Brandywine-AI Venture LLC	Other	Total
Net property	198,043	47,043	590,897	835,983
Other assets (a)	65,465	11,206	82,828	159,499
Other liabilities (a)	59,348	2,002	24,331	85,681
Debt, net (b)	180,555	26,020	159,132	365,707
Equity (c)	23,605	30,227	490,262	544,094

(a) The increase is primarily due to the recording of lease related assets and liabilities of $197.1 million and $206.4 million, respectively, for MAP Venture in connection with the adoption of Topic 842.

(b) The increase is primarily due to third-party debt financing received by Herndon Innovation Center Venture during 2019. See “Herndon Innovation Center Metro Portfolio Venture” section below for further information.

(c) This amount does not include 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.

Investment in Real Estate Ventures and Share of Real Estate Ventures' Income (Loss)

The Company’s investment in Real Estate Ventures as of December 31, 2019 and 2018, and the Company’s share of the Real Estate Ventures’ income (loss) for the years ended December 31, 2019 and 2018 was as follows (in thousands):

	Ownership Percentage (a)	Carrying Amount					Company's Share of Real Estate Venture Income (Loss)						Real Estate Venture Debt at 100%, gross
		2019			2018		2019			2018			2019		2018
Office Properties
Brandywine - AI Venture LLC	50%	$	10,116		$	11,731	$	(2,800	)	$	(14,559	)	$	—	$	26,111
Herndon Innovation Center Metro Portfolio Venture, LLC	15%	16,446			47,834		(498		)	83			207,302		—
MAP Venture	50%	(70		)	11,173		(6,102		)	(2,155		)	185,000		185,000
PJP VII	25% (b)	—			1,100		190			157			—		3,777
PJP II	30% (b)	—			663		81			179			—		2,214
PJP VI	25% (b)	—			125		(185		)	71			—		7,069
Austin Venture	50% (c)	—			—		—			1,687			—		—
Other
1919 Venture	50%	17,524			19,897		328			253			88,860		88,860
evo at Cira Centre South Venture	50%	—			—		—			(358		)	—		—
Development Properties
4040 Wilson Venture (d)	50%	37,002			37,371		(368		)	(192		)	114,845		57,288
JBG - 51 N Street (d)	70%	21,531			21,368		(313		)	(137		)	—		—
JBG - 1250 First Street Office (d)	70%	17,745			17,838		(255		)	(260		)	—		—
		$	120,294		$	169,100	$	(9,922	)	$	(15,231	)	$	596,007	$	370,319

(a) Ownership percentage represents the Company’s entitlement to residual distributions after payments of priority returns, where applicable.

(b) On October 29, 2019. The Company sold its interest in PJP II, PJP VI and PJP VII. See "PJP Ventures" section below for more information on the disposal.

(c) The Company’s purchased its partner’s entire 50% interest in this venture on December 11, 2018. Refer to the "Austin Venture" section below for more information.

(d) This entity is a VIE.

The following is a summary of the financial position of the Real Estate Ventures as of December 31, 2019 and December 31, 2018 (in thousands):

	December 31, 2019
	MAP Venture	Brandywine-AI Venture LLC	Other	Total
Net property	192,582	24,651	617,134	$	834,367
Other assets (a)	256,453	3,000	82,549	342,002
Other liabilities (a)	266,200	824	23,047	290,071
Debt, net (b)	181,525	—	403,543	585,068
Equity (c)	1,310	26,827	273,093	301,230

	December 31, 2018
	MAP Venture	Brandywine-AI Venture LLC	Other	Total
Net property	198,043	47,043	590,897	835,983
Other assets (a)	65,465	11,206	82,828	159,499
Other liabilities (a)	59,348	2,002	24,331	85,681
Debt, net (b)	180,555	26,020	159,132	365,707
Equity (c)	23,605	30,227	490,262	544,094

(a) The increase is primarily due to the recording of lease related assets and liabilities of $197.1 million and $206.4 million, respectively, for MAP Venture in connection with the adoption of Topic 842.

(b) The increase is primarily due to third-party debt financing received by Herndon Innovation Center Venture during 2019. See “Herndon Innovation Center Metro Portfolio Venture” section below for further information.

(c) This amount does not include 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.

The following is a summary of results of operations of the Real Estate Ventures in which the Company had interests during the twelve-month periods ended December 31, 2019, 2018 and 2017 (in thousands):

	Year Ended December 31, 2019
	MAP Venture			Brandywine-AI Venture LLC			Other			Total
Revenue	$	70,366		$	6,022		$	55,970		$	132,358
Operating expenses	(47,362		)	(2,912		)	(21,510		)	(71,784		)
Provision for impairment	—			(5,664		)	—			(5,664		)
Interest expense, net	(9,752		)	(698		)	(11,458		)	(21,908		)
Depreciation and amortization	(25,413		)	(2,514		)	(25,404		)	(53,331		)
Loss on extinguishment of debt	—			—			(1,231		)	(1,231		)
Net loss	$	(12,161	)	$	(5,766	)	$	(3,633	)	$	(21,560	)
Ownership interest %	50		%	50		%	Various			Various
Company's share of net loss	$	(6,081	)	$	(2,883	)	$	(901	)	$	(9,865	)
Basis adjustments and other	(21		)	83			(119		)	(57		)
Equity in loss of Real Estate Ventures	$	(6,102	)	$	(2,800	)	$	(1,020	)	$	(9,922	)

	Year Ended December 31, 2018
	MAP Venture			Austin Venture			Brandywine-AI Venture LLC			evo at Cira Centre South			Other			Total
Revenue	$	68,622		$	53,476		$	23,515		$	163		$	19,550		$	165,326
Operating expenses	(41,056		)	(22,994		)	(10,483		)	(256		)	(7,246		)	(82,035		)
Interest expense, net	(12,690		)	(9,083		)	(3,478		)	(123		)	(4,400		)	(29,774		)
Depreciation and amortization	(18,891		)	(19,226		)	(8,991		)	(409		)	(6,309		)	(53,826		)
Provision for impairment	—			—			(20,832		)	—			—			(20,832		)
Loss on extinguishment of debt	(334		)	(356		)	(695		)	—			—			(1,385		)
Net income (loss)	$	(4,349	)	$	1,817		$	(20,964	)	$	(625	)	$	1,595		$	(22,526	)
Ownership interest %	50		%	50		%	50		%	50		%	Various			Various
Company's share of net income (loss)	$	(2,175	)	$	909		$	(10,482	)	$	(313	)	$	137		$	(11,924	)
Other than temporary impairment	—			—			(4,076		)	—			—			(4,076		)
Basis adjustments and other	20			778			(1		)	(45		)	17			769
Equity in income (loss) of Real Estate Ventures	$	(2,155	)	$	1,687		$	(14,559	)	$	(358	)	$	154		$	(15,231	)

	Year Ended December 31, 2017
	MAP Venture			Austin Venture			Brandywine-AI Venture LLC			evo at Cira Centre South			Other			Total
Revenue	$	68,573		$	85,500		$	29,500		$	12,285		$	20,413		$	216,271
Operating expenses	(40,035		)	(35,997		)	(12,298		)	(3,075		)	(7,935		)	(99,340		)
Interest expense, net	(13,677		)	(13,985		)	(4,707		)	(4,092		)	(3,752		)	(40,213		)
Depreciation and amortization	(21,202		)	(34,026		)	(11,428		)	(4,512		)	(7,272		)	(78,440		)
Loss on extinguishment of debt	—			(2,613		)	(811		)	—			—			(3,424		)
Net income (loss)	$	(6,341	)	$	(1,121	)	$	256		$	606		$	1,454		$	(5,146	)
Ownership interest %	50		%	50		%	50		%	50		%	Various
Company's share of net income (loss)	$	(3,171	)	$	(560	)	$	128		$	303		$	1,436		$	(1,864	)
Other than temporary impairment	—			—			(4,844		)	—			—			(4,844		)
Basis adjustments and other	(272		)	(429		)	251			146			(1,294		)	(1,598		)
Equity in income (loss) of Real Estate Ventures	$	(3,443	)	$	(989	)	$	(4,465	)	$	449		$	142		$	(8,306	)

Schedule of Maturities of Long-term Debt

As of December 31, 2019, the aggregate principal payments of recourse and non-recourse debt payable to third-parties are as follows (in thousands):

2020	$	—
2021	114,845
2022	—
2023	273,860
2024	207,302
Thereafter	—
Total principal payments	596,007
Net deferred financing costs	(10,939		)
Outstanding indebtedness	$	585,068

As of December 31, 2019, the Company’s aggregate scheduled principal payments of debt obligations, excluding amortization of discounts and premiums, are as follows (in thousands):

2020	$	87,226
2021	15,143
2022	256,332
2023	556,736
2024	350,000
Thereafter	878,610
Total principal payments	2,144,047
Net unamortized premiums/(discounts)	10,707
Net deferred financing costs	(10,336		)
Outstanding indebtedness	$	2,144,418

Summary of Gain on Sale for Each Land Parcel

The following table summarizes the properties sold during the years ended December 31, 2019, 2018 and 2017 (dollars in thousands):

Property/Portfolio Name	Disposition Date	Location	Property Type	Rentable Square Feet/ Acres	Sales Price		Gain/(Loss) on Sale (a)
1900 Gallows Rd	September 11, 2019	Vienna, VA	Office	210,632	$	36,400	$	(367	)
9 Presidential Boulevard	March 15, 2019	Bala Cynwyd, PA	Land	2.7 Acres	5,325		751
Subaru National Training Center (b)	December 21, 2018	Camden, NJ	Mixed-use	83,000	45,300		2,570
Rockpoint Portfolio (c)	December 20, 2018	Herndon, VA	Office	1,293,197	312,000		397
20 East Clementon Road	June 21, 2018	Gibbsboro, NJ	Office	38,260	2,000		(35		)
Garza Ranch - Office (d)	March 16, 2018	Austin, TX	Land	6.6 acres	14,571		1,515
Westpark Land	January 10, 2018	Durham, NC	Land	13.1 acres	485		22
11, 14, 15, 17 and 18 Campus Boulevard (Newtown Square)	November 22, 2017	Newtown Square, PA	Office	252,802	42,000		19,642
630 Allendale Road	October 31, 2017	King of Prussia, PA	Office	150,000	17,500		3,605
50 E. Swedesford Square	September 13, 2017	Malvern, PA	Land	12.0 acres	7,200		882
Bishop's Gate	July 18, 2017	Mount Laurel, NJ	Land	49.5 acres	6,000		71
Two, Four A, Four B and Five Eves Drive (Evesham Corporate Center) (e)	June 27, 2017	Marlton, NJ	Office	134,794	9,700		(325		)
7000 Midlantic Drive	June 12, 2017	Mount Laurel, NJ	Retail	10,784	8,200		1,413
Garza Ranch - Multi-family (d)	April 28, 2017	Austin, TX	Land	8.4 acres	11,800		1,311
200, 210 & 220 Lake Drive East (Woodland Falls)	March 30, 2017	Cherry Hill, NJ	Office	215,465	19,000		(249		)
Philadelphia Marine Center (Marine Piers) (f)	March 15, 2017	Philadelphia, PA	Mixed-use	181,900	21,400		6,498
11700, 11710, 11720 & 11740 Beltsville Drive (Calverton) (g)	March 13, 2017	Beltsville, MD	Office	313,810	9,000		—
Gateway Land - Site C	February 15, 2017	Richmond, VA	Land	4.8 acres	1,100		—
1200 & 1220 Concord Avenue (Concord Airport Plaza)	February 2, 2017	Concord, CA	Office	350,256	33,100		551
Garza Ranch - Hotel (d)	January 30, 2017	Austin, TX	Land	1.7 acres	3,500		192

(a) Gain/(Loss) on Sale is net of closing and other transaction related costs.

(b) During the third quarter of 2018, the tenant, Subaru, exercised its purchase option for the Subaru National Training Center Development. The lease with Subaru was classified as a direct finance lease within "Other assets" on the consolidated balance sheets. In connection with the lease, the Company recognized $1.6 million in interest income during the twelve months ended December 31, 2018, in accordance with accounting guidance for direct finance leases under ASC 840.

(c) For information related to this transaction, see the “Herndon Innovation Center Metro Portfolio Venture, LLC” section in Note 4, “Investment in Unconsolidated Real Estate Ventures.”

(d) The Company had continuing involvement in these properties through a completion guaranty, which required the Company, as developer, to complete certain infrastructure improvements on behalf of the buyers of the land parcels. The Company recorded the cash received at settlement as “Deferred income, gains and rent” on the consolidated balance sheet. The Company subsequently recognized the land sales and the $3.0 million gain on sale during the twelve months ended December 31, 2018 upon substantial completion of the infrastructure improvements and transfer of control to the buyer.

(e) As of March 31, 2017, the Company evaluated the recoverability of the carrying value of its properties that triggered assessment under the undiscounted cash flow model. Based on the Company’s evaluation, it was determined that due to the reduction in the Company’s intended hold period of four properties located in the Other segment, the Company would not recover the carrying values of these properties. Accordingly, the Company recorded impairment charges on these properties of $1.0 million at March 31, 2017, which reduced the aggregate carrying values of the properties from $10.2 million to their estimated fair value of $9.2 million. The Company measured these impairments based on a discounted cash flow analysis, using a hold period of 10 years and residual capitalization rates and discount rates of 9.00% and 9.25%, respectively. The results were comparable to indicative pricing in the market. The assumptions used to determine fair value under the income approach are Level 3 inputs in accordance with the fair value hierarchy. The loss on sale in the table above represents additional closing costs.

(f) On the closing date, the buyer paid $12.0 million in cash and the Company received cash proceeds of $11.2 million, after closing costs and prorations. The $9.4 million balance of the purchase price was due on (a) January 31, 2020, in the event that the tenant at the Marine Piers does not exercise an option it holds to extend the term of the sublease or (b) January 15, 2024, in the event that the tenant does exercise the option to extend the term of the sublease. The Company determined that it was appropriate to recognize the sale of the sublease interest in the Marine Piers and to defer the remaining $9.4 million balance due under the purchase and sale agreement until collectability can be determined. During the first quarter of 2019, the tenant at the Marine Piers exercised its option to extend the term of its sublease. As a result, the $9.4 million balance of the purchase price is due on January 15, 2024, and the Company will recognize the additional gain on sale when the gain is realized or realizable.

(g) During the twelve months ended 2017, there was a price reduction of $1.7 million under the agreement of sale and additional impairment of $1.7 million was recognized.

The summary of the transaction is as follows (in thousands);

	October 18, 2017
Gross sales price	$	333,250
Debt principal	(150,968		)
Debt prepayment penalties	(2,120		)
Closing costs and net prorations	(7,420		)
Cash to Austin Venture	$	172,742
Company's ownership interest	50		%
Cash to the Company	$	86,371
Cash to Austin Venture	$	172,742
Austin Venture basis of sold properties	(92,559		)
Austin Venture gain on sale	$	80,183
Company's ownership interest	50		%
Company's share of gain	$	40,092
Company's share of gain	$	40,092
Deferred gain from partial sale	12,072
Gain on real estate venture transactions	$	52,164