INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

3 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

4. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

As of March 31, 2023, the Company held ownership interests in eleven unconsolidated real estate ventures, with a net aggregate investment balance of $545.5 million, which includes a negative investment balance in one unconsolidated real estate venture of $38.3 million, reflected within “Other liabilities” on the consolidated balance sheets. As of March 31, 2023, five of the real estate ventures owned properties that contained an aggregate of approximately 9.1 million net rentable square feet of office space; two real estate ventures owned 1.4 acres of land held for development; four real estate ventures owned 7.5 acres of land in active development; one real estate venture owned a mixed used tower comprised of 250 apartment units and 0.2 million net rentable square feet of office/retail space.

The Company accounts for its interests in the unconsolidated real estate ventures, which range from 15% to 70%, using the equity method. Certain of the unconsolidated real estate ventures are subject to specified priority allocations of distributable cash.

The Company earned management fees from the unconsolidated real estate ventures of $2.1 million and $1.9 million for the three months ended March 31, 2023 and 2022, respectively.The Company earned leasing commissions from the unconsolidated real estate ventures of $0.7 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively

The Company had outstanding accounts receivable balances from the unconsolidated real estate ventures of $2.9 million for both March 31, 2023 and December 31, 2022, respectively.

The amounts reflected in the following tables (except for the Company’s share of equity in income) are based on the financial information of the individual unconsolidated real estate ventures.

The following is a summary of the financial position of the unconsolidated real estate ventures in which the Company held interests as of March 31, 2023 and December 31, 2022 (in thousands):

	March 31, 2023		December 31, 2022
Net property	$	2,188,884	$	2,117,226
Other assets	521,301		506,213
Other liabilities	448,507		446,101
Debt, net	1,236,629		1,198,213
Equity (a)	1,025,049		979,125

(a)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 unconsolidated real estate ventures in which the Company held interests during the three-month periods ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023		2022
Revenue	$	57,886	$	53,216
Operating expenses	(28,851)		(28,592)
Interest expense, net	(15,891)		(7,469)
Depreciation and amortization	(24,174)		(21,283)
Net loss	$	(11,030)	$	(4,128)
Ownership interest %	Various		Various
Company's share of net loss	$	(6,124)	$	(4,617)
Basis adjustments and other	(43)		54
Equity in loss of unconsolidated real estate ventures	$	(6,167)	$	(4,563)

Commerce Square Venture

The properties held by the venture are encumbered by existing mortgages that were set to expire on April 5, 2023. The lender of the mortgages provided the venture with a two month extension until June 5, 2023. The venture is actively working to satisfy the mortgage debt prior to maturity but there can be no assurances the mortgage debt will be satisfied or additional extension options will be provided by the existing lender. The mortgage debt is non-recourse to Company.