Investments in real estate

9 Months Ended

Sep. 30, 2021

INVESTMENTS IN REAL ESTATE

Our consolidated investments in real estate, including real estate assets held for sale as described in Note 15 – “Assets classified as held for sale” to our unaudited consolidated financial statements, consisted of the following as of September 30, 2021, and December 31, 2020 (in thousands):


	September 30, 2021		December 31, 2020
Rental properties:
Land (related to rental properties)	$	3,719,945	$	2,550,571
Buildings and building improvements	15,846,048		13,364,561
Other improvements	1,933,879		1,508,776
Rental properties	21,499,872		17,423,908
Development and redevelopment of new Class A properties:
Development and redevelopment projects	4,037,309		3,075,453
Future development projects	1,130,464		738,994
Gross investments in real estate	26,667,645		21,238,355
Less: accumulated depreciation	(3,609,994)		(3,178,024)
Net investments in real estate – North America	23,057,651		18,060,331
Net investments in real estate – Asia	13,863		32,041
Investments in real estate	$	23,071,514	$	18,092,372

Acquisitions

Our real estate asset acquisitions during the nine months ended September 30, 2021, consisted of the following (dollars in thousands):


		Square Footage
Market	Number of Properties	Future Development	Active Development/Redevelopment	Operating With Future Development/Redevelopment	Operating	Purchase Price
Greater Boston	3	305,000	640,116	311,066	692,088	$	1,541,326




Other	22	69,426	209,295	120,000	741,191	332,424
Three months ended March 31, 2021	25	374,426	849,411	431,066	1,433,279	1,873,750

Greater Boston	2	1,125,000	—	260,867	240,000	235,000
San Francisco Bay Area	7	—	—	187,043	—	217,000
San Diego	5	887,000	—	487,023	—	298,476
Maryland	5	258,000	94,256	—	595,381	80,382
Other	5	1,863,280	37,267	205,983	49,839	247,597
Three months ended June 30, 2021	24	4,133,280	131,523	1,140,916	885,220	1,078,455

Greater Boston	4	440,992	453,869	173,276	—	192,000
San Francisco Bay Area	1	700,000	—	223,232	—	105,250
San Diego	14	64,235	—	440,311	413,909	221,234
Research Triangle	—	1,055,000	—	—	—	91,000
Other	8	1,178,188	—	414,286	307,581	380,213
Three months ended September 30, 2021	27	3,438,415	453,869	1,251,105	721,490	989,697		(1)

Nine months ended September 30, 2021	76	7,946,121	1,434,803	2,823,087	3,039,989	$	3,941,902	(2)

(1)Includes $185.2 million related to deferred purchase price obligations in connection with two acquisitions of real estate. We paid $25.2 million of this balance in October 2021, upon completion of one of the acquisitions.

(2)Represents the aggregate contractual purchase price of our acquisitions, which differ from purchases of real estate in our consolidated statements of cash flows due to the timing of payment, closing costs and other acquisition adjustments such as prorations of rents and expenses.

Based upon our evaluation of each acquisition, we determined that substantially all of the fair value related to each acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets, or is associated with a land parcel with no operations. Accordingly, each transaction did not meet the definition of a business and therefore was accounted for as an asset acquisition. In each of these transactions, we allocated the total consideration for each acquisition to the individual assets and liabilities acquired on a relative fair value basis.

During the nine months ended September 30, 2021, we acquired 76 properties for an aggregate purchase price of $3.9 billion. In connection with our acquisitions, we recorded in-place leases aggregating $275.0 million and below-market leases in which we are the lessor aggregating $113.1 million. As of September 30, 2021, the weighted-average amortization period remaining on our in-place and below-market leases acquired during the nine months ended September 30, 2021, was 8.7 years and 10.0 years, respectively, and 9.1 years in total.

Purchase of partner’s interest in an unconsolidated real estate joint venture in March 2021

As of December 31, 2020, we had a 56.8% interest in an unconsolidated real estate joint venture that owned an operating property aggregating 80,032 RSF located at 704 Quince Orchard Road in our Gaithersburg submarket of Maryland. We accounted for this joint venture under the equity method of accounting. On March 25, 2021, we acquired the remaining 43.2% interest in this real estate joint venture for $9.4 million and fully repaid the outstanding secured loan with principal and accrued interest aggregating $14.6 million as of March 25, 2021.

As a result of this acquisition, we now own 100% of this property and consolidate its results in our consolidated financial statements. The acquired property did not meet the definition of a business and the transaction was accounted for as an asset acquisition. Under our existing accounting policy election, we follow the asset acquisition cost accumulation and allocation model. Accordingly, we did not remeasure our previously held equity interest at fair value and did not recognize a gain or loss in our consolidated statements of operations. The acquisition consideration and the carrying amount of our existing equity interest were allocated to the individual assets acquired and liabilities assumed on a relative fair value basis.

Refer to Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for more information about our evaluation of applicability of asset acquisition or business combination accounting guidance.

Real estate assets acquired in October 2021

In October 2021, we completed the acquisition of two properties for an aggregate purchase price of $203.8 million comprising 185,228 RSF of operating properties with future development and redevelopment opportunities.

Real estate impairment charges

During the nine months ended September 30, 2021, we recognized impairment charges aggregating $52.7 million, primarily consisting of the following:

•Impairment charge of $22.5 million during the three months ended September 30, 2021, upon classification as held for sale of an option to purchase a land parcel in our SoMa submarket for the development of an office property, to reduce the option’s carrying amount to its estimated fair value less costs to sell.

•Impairment charge of $18.6 million during the three months ended September 30, 2021, to reduce the carrying amount of a property located in a non-core submarket to its estimated fair value less costs to sell, upon our review of the current local market conditions.

•Impairment charges aggregating $6.9 million during the six months ended June 30, 2021, to reduce the carrying amounts of three office properties located in our San Francisco Bay Area and Seattle markets to their estimated fair values less costs to sell, based on the sales price negotiated for each property during this period. We completed the sales of these properties during the three months ended September 30, 2021.

Refer to “Impairment of long-lived assets” within Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements for additional information.