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Investments in Unconsolidated Joint Ventures
 12 Months Ended
Dec. 31, 2023
Investments In Unconsolidated Joint Ventures [Abstract]  
Investments In Unconsolidated Joint Ventures
6. Investments in Unconsolidated Joint Ventures
The investments in unconsolidated joint ventures consist of the following at December 31, 2023 and December 31, 2022:
 Carrying Value of Investment (1)
EntityPropertiesNominal % OwnershipDecember 31, 2023December 31, 2022
(in thousands)
Square 407 Limited PartnershipMarket Square North50.00 %$(5,996)$(6,198)
BP/CRF Metropolitan Square LLCMetropolitan Square20.00 %(2)— (37,629)
901 New York, LLC901 New York Avenue25.00 %(3)(11,764)(12,493)
WP Project Developer LLC
Wisconsin Place Land and Infrastructure
33.33 %(4)30,375 31,971 
500 North Capitol Venture LLC500 North Capitol Street, NW30.00 %(10,253)(9,185)
501 K Street LLC
1001 6th Street
50.00 %44,774 42,922 
Podium Developer LLCThe Hub on Causeway - Podium50.00 %45,201 46,839 
Residential Tower Developer LLCHub50House50.00 %40,235 45,414 
Hotel Tower Developer LLC
The Hub on Causeway - Hotel Air Rights
50.00 %13,494 12,366 
Office Tower Developer LLC100 Causeway Street50.00 %57,660 59,716 
1265 Main Office JV LLC1265 Main Street50.00 %3,585 3,465 
BNY Tower Holdings LLCDock 72 50.00 %(5)(11,890)(19,921)
CA-Colorado Center, LLCColorado Center50.00 %237,815 233,862 
7750 Wisconsin Avenue LLC 7750 Wisconsin Avenue 50.00 %50,064 52,152 
BP-M 3HB Venture LLC3 Hudson Boulevard25.00 %115,103 116,397 
SMBP Venture LPSanta Monica Business Park55.00 %(6)— 164,735 
Platform 16 Holdings LPPlatform 1655.00 %(7)(8)45,564 158,109 
Gateway Portfolio Holdings LLCGateway Commons50.00 %376,834 324,038 
Rosecrans-Sepulveda Partners 4, LLCBeach Cities Media Campus50.00 %27,034 27,000 
Safeco Plaza REIT LLCSafeco Plaza33.67 %(8)(9)44,734 69,785 
360 PAS Holdco LLC360 Park Avenue South71.11 %(8)(10)42,988 114,992 
PR II/BXP Reston Gateway LLCSkymark - Reston Next Residential20.00 %15,184 11,351 
751 Gateway Holdings LLC751 Gateway 49.00 %93,411 80,714 
200 Fifth Avenue JV LLC200 Fifth Avenue26.69 %(8)75,718 120,083 
ABXP Worldgate Investments LLC13100 and 13150 Worldgate Drive50.00 %17,546 N/A
$1,337,416 $1,630,485 
 _______________
(1)Investments with deficit balances aggregating approximately $39.9 million and $85.4 million at December 31, 2023 and December 31, 2022, respectively, are included within Other Liabilities in the Company’s Consolidated Balance Sheets.
(2)During the year ended December 31, 2023, the Company completed a restructuring of its ownership in Metropolitan Square, as described below in this Note 6.
(3)The Company’s economic ownership increased based on the achievement of certain return thresholds. At December 31, 2023 and December 31, 2022, the Company’s economic ownership was approximately 50%. On January 8, 2024, the Company’s joint venture partner transferred all of its interest in the joint venture to the Company for a gross purchase price of $10.0 million, see Note 17 for more information.
(4)The Company’s wholly-owned subsidiary that owns Wisconsin Place Office also owns a 33.33% interest in the joint venture entity that owns the land, parking garage and infrastructure of the project.
(5)This property includes net equity balances from the amenity joint venture.
(6)During the year ended December 31, 2023, the Company completed the acquisition of its joint venture partner’s 45% ownership interest in Santa Monica Business Park, as described below in this Note 6 and Note 3.
(7)At December 31, 2022, this entity was a VIE.
(8)During the year ended December 31, 2023, the Company recognized an other-than-temporary impairment loss on its investment.
(9)The Company’s ownership includes (1) a 33.0% direct interest in the joint venture, and (2) an additional 1% interest in each of the two entities through which each partner owns its interest in the joint venture.
(10)On December 14, 2023, the Company completed the acquisition of all of one of its joint venture partners ownership interest. As a result of this acquisition, at December 31, 2023, the Company’s ownership includes (1) a 35.79% direct interest in the joint venture, (2) an additional 35.02% indirect ownership in the joint venture, and (3) an additional 1% interest in the entity through which the partner owns its interest in the joint venture. The Company’s partner will fund required capital until its aggregate investment is approximately 29% of all capital contributions; thereafter, the partners will fund required capital according to their percentage interests. At December 31, 2022, the Company’s ownership included (1) a 35.79% direct interest in the joint venture, (2) an additional 5.837% indirect ownership in the joint venture, and (3) an additional 1% interest in each of the two entities through which each partner owns its interest in the joint venture.
Certain of the Company’s unconsolidated joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. Under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments.
The combined summarized balance sheets of the Company’s unconsolidated joint ventures are as follows: 
December 31, 2023December 31, 2022
 (in thousands)
ASSETS
Real estate and development in process, net (1)$5,811,763 $6,537,554 
Other assets (2)682,291 756,786 
Total assets$6,494,054 $7,294,340 
LIABILITIES AND MEMBERS’/PARTNERS’ EQUITY
Mortgage and notes payable, net$3,351,873 $4,022,746 
Other liabilities (3)361,357 716,271 
Members’/Partners’ equity2,780,824 2,555,323 
Total liabilities and members’/partners’ equity$6,494,054 $7,294,340 
Company’s share of equity$1,278,483 $1,238,929 
Basis differentials (4)58,933 391,556 
Carrying value of the Company’s investments in unconsolidated joint ventures (5)$1,337,416 $1,630,485 
_______________
(1)At December 31, 2022, this amount included right of use assets - finance leases totaling approximately $248.9 million. At December 31, 2023 and December 31, 2022, this amount included right of use assets - operating leases totaling approximately $20.1 million and $21.2 million, respectively.
(2)At December 31, 2023, this amount included sales-type lease receivable, net totaling approximately $13.9 million.
(3)At December 31, 2022, this amount included lease liabilities - finance leases totaling approximately $382.2 million. At December 31, 2023 and December 31, 2022, this amount included lease liabilities - operating leases totaling approximately $30.5 million.
(4)This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the joint venture level, which is typically amortized over the life of the related assets and liabilities. Basis differentials
result from impairments of investments, acquisitions through joint ventures with no change in control and upon the transfer of assets that were previously owned by the Company into a joint venture. During the year ended December 31, 2023, the Company recognized an other-than-temporary impairment loss on its investments in Platform 16, 360 Park Avenue South, 200 Fifth Avenue and Safeco Plaza of approximately $155.2 million, $54.0 million, $33.4 million and $29.9 million, respectively, as well as a $35.8 million gain on investment related to Metropolitan Square, as described below in this Note 6. In addition, certain acquisition, transaction and other costs may not be reflected in the net assets at the joint venture level. The majority of the Company’s basis differences are as follows:
December 31, 2023December 31, 2022
Property(in thousands)
Colorado Center$298,906 $301,820 
200 Fifth Avenue58,308 94,497 
Gateway Commons48,971 47,808 
Safeco Plaza(29,678)(15)
360 Park Avenue South(116,534)3,798 
Dock 72(95,521)(98,980)
Platform 16(143,052)7,108 
These basis differentials (excluding land) will be amortized over the remaining lives of the related assets and liabilities.
(5)Investments with deficit balances aggregating approximately $39.9 million and $85.4 million at December 31, 2023 and December 31, 2022, respectively, are reflected within Other Liabilities in the Company’s Consolidated Balance Sheets.
The combined summarized statements of operations of the Company’s unconsolidated joint ventures are as follows: 
 Year ended December 31,
 202320222021
 (in thousands)
Total revenue (1)$612,589 $512,078 $383,649 
Expenses
Operating239,947 198,632 158,498 
Transaction costs301 837 470 
Depreciation and amortization197,228 181,041 147,121 
Total expenses437,476 380,510 306,089 
Other income (expense)
Loss from early extinguishment of debt(3)(1,327)— 
Interest expense(227,537)(154,065)(108,884)
Unrealized gain (loss) on derivative instruments(6,582)1,681 — 
Gain on sales-type lease2,737 — — 
Net loss$(56,272)$(22,143)$(31,324)
Company’s share of net loss$(19,599)$(2,551)$(10,254)
Gain on sale of investment (2)— — 10,257 
Gain on investment (3)35,756 — — 
Gain (loss) on sale / consolidation (3)(4)28,412 — — 
Impairment losses on investments (5)(272,603)(50,705)— 
Basis differential (6)(11,509)(6,584)(2,573)
Loss from unconsolidated joint ventures$(239,543)$(59,840)$(2,570)
_______________ 
(1)Includes straight-line rent adjustments of approximately $28.7 million, $62.9 million and $17.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.
(2)During the year ended December 31, 2021, the Company completed the sale of its 50% ownership interest in Annapolis Junction NFM LLC. The Company recognized a gain on sale of investment of approximately $10.3 million.
(3)During the year ended December 31, 2023, the Company completed a restructuring of its ownership in Metropolitan Square, as described below in this Note 6.
(4)During the year ended December 31, 2023, the Company acquired its joint venture partner’s 45% ownership interest in Santa Monica Business Park, as described below in this Note 6.
(5)During the year ended December 31, 2023, the Company recognized an other-than-temporary impairment loss on its investments in Platform 16, 360 Park Avenue South, 200 Fifth Avenue and Safeco Plaza of approximately $155.2 million, $54.0 million, $33.4 million and $29.9 million, respectively, as described below in this Note 6. During the year ended December 31, 2022, the Company recognized an other-than-temporary impairment loss on its investment in the unconsolidated joint venture that owns Dock 72 in Brooklyn, New York totaling approximately $50.7 million.
(6)Includes straight-line rent adjustments of approximately $1.5 million, $0.5 million and $0.8 million for the years ended December 31, 2023, 2022 and 2020, respectively. Also includes net above-/below-market rent adjustments of approximately $0.8 million, $0.4 million and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.
On January 31, 2023, the Company acquired a 50% interest in a joint venture that owns 13100 and 13150 Worldgate Drive located in Herndon, Virginia for a gross purchase price of approximately $17.0 million. The acquisition was completed with available cash. 13100 and 13150 Worldgate Drive consists of two vacant office buildings aggregating approximately 350,000 rentable square feet and a 1,200-space structured parking deck situated on a 10-acre site. The joint venture intends to redevelop the property for residential use. There can be no assurance that the joint venture will commence the development as currently contemplated or at all.
On April 21, 2023, a joint venture in which the Company owns a 50% interest exercised an option to extend the maturity date of the construction loan collateralized by its 7750 Wisconsin Avenue property. Prior to the extension, the loan had a total commitment amount of approximately $252.6 million, bore interest at a variable rate equal to London Interbank Offered Rate (“LIBOR”) plus 1.25% per annum and was scheduled to mature on April 26, 2023, with two, one-year extension options, subject to certain conditions. The extended loan continued to bear interest at LIBOR plus 1.25% per annum through June 1, 2023 after which, the interest rate was converted to a variable rate equal to Term Secured Overnight Finance Rate (“SOFR”) plus 1.35% per annum. The extended loan now matures on April 26, 2024, with a one-year extension option, subject to certain conditions (See Note 17). 7750 Wisconsin Avenue is a premier workplace with approximately 736,000 net rentable square feet located in Bethesda, Maryland.
On June 5, 2023, a joint venture in which the Company owns a 30% interest repaid the existing construction loan collateralized by its 500 North Capitol Street, NW property and obtained new mortgage loans with related parties. At the time of the repayment, the outstanding balance of the loan totaled approximately $105.0 million and the loan was scheduled to mature on June 6, 2023. The new mortgage loans have an aggregate principal balance of $105.0 million, bear interest at a weighted average fixed rate of 6.83% per annum and mature on June 5, 2026. The Company’s portion of the mortgage loans, $10.5 million, has been reflected as a Related Party Note Receivable on the Company’s Consolidated Balance Sheets. 500 North Capitol Street, NW is an approximately 231,000 net rentable square foot premier workplace in Washington, DC.
On June 28, 2023, a joint venture in which the Company owns a 25% interest exercised an option to extend by 30 days the maturity date of the loan collateralized by its 3 Hudson Boulevard property. At the time of the extension, the loan had an outstanding balance of $80.0 million, bore interest at a variable rate equal to LIBOR plus 3.50% per annum and was scheduled to mature on July 13, 2023, with two extension options (30 days and 180 days, respectively), subject to certain conditions. Following the extension, the modified loan was scheduled to mature on August 13, 2023, with one 180-day extension option, subject to certain conditions. The extended loan continued to bear interest at a variable rate equal to LIBOR plus 3.50% per annum for the period from June 28, 2023 through July 6, 2023. For the period commencing on July 7, 2023 through the maturity date, the modified loan bears interest at a variable rate equal to Term SOFR plus approximately 3.61% per annum. On August 11, 2023, the joint venture exercised its second extension option of 180 days. The extended loan now matures on February 9, 2024 (See Note 17). As of December 31, 2023, the loan had approximately $28.0 million of accrued interest due at the maturity date. 3 Hudson Boulevard consists of land and improvements held for future development located in New York, New York.
On July 28, 2023, a joint venture in which the Company has a 50% interest modified and exercised an option to extend by one year the maturity date of its loan collateralized by 100 Causeway Street. At the time of the modification and extension, the loan had an outstanding balance totaling approximately $340.6 million, bore interest at Term SOFR plus 1.60% per annum, and was scheduled to mature on September 5, 2023. Following the modification and extension, the loan had an outstanding balance of $336.6 million, which included an approximately
$4.0 million principal repayment, bears interest at Term SOFR plus 1.48% per annum, and matures on September 5, 2024, with an additional one-year extension option, subject to certain conditions. 100 Causeway Street is an approximately 634,000 net rentable square foot premier workplace located in Boston, Massachusetts and is approximately 95% leased.
On September 1, 2023, a joint venture in which the Company has a 49% interest completed and fully placed in-service 751 Gateway, an approximately 231,000 net rentable square foot laboratory/life sciences project in South San Francisco, California. The property is 100% leased.
On September 6, 2023, a joint venture in which the Company has a 50% interest modified the loan collateralized by its Hub on Causeway - Podium property. At the time of the modification, the loan had an outstanding balance of approximately $174.3 million, bore interest at Term SOFR plus 2.35% per annum, and was scheduled to mature on September 6, 2023. Following the modification, the modified loan had an outstanding balance of $154.3 million, which included an approximately $20.0 million principal repayment, bore interest at Daily SOFR plus 2.50% per annum, and matures on September 8, 2025, with a one-year extension option, subject to certain conditions. On September 8, 2023, the joint venture entered into interest rate swap contracts with notional amounts aggregating approximately $154.3 million through September 2, 2025, resulting in a fixed interest rate of approximately 7.35% per annum through the expiration of the interest rate swap contracts. The Hub on Causeway - Podium is an approximately 383,000 net rentable square foot premier workplace located in Boston, Massachusetts and is approximately 94% leased.
On September 13, 2023, a joint venture in which the Company owned a 20% equity interest completed the first step of a two-step restructuring of its ownership in Metropolitan Square. The two-step restructuring resulted in (i) an affiliate of the existing mezzanine lender purchasing the property and becoming the new property owner and the Company no longer having an equity interest in the property and (ii) the Company becoming a co-lender of up to $20.0 million under a new $100.0 million mezzanine loan (“New Mezz Loan”). Prior to the restructuring, the property was encumbered by an aggregate of $420.0 million of debt, consisting of a senior loan with an outstanding principal balance of $305.0 million (“Senior Loan”) and the existing $115.0 million mezzanine loan (“Existing Mezz Loan”). The joint venture completed step one of the restructuring on September 13, 2023, resulted in, among other things, (i) the cessation of the Company’s obligation to fund future investments through its then 20% equity interest, which resulted in the recognition of gain on investment of approximately $35.8 million related to its deficit investment balance, which was primarily due to excess distributions, and (ii) the removal of the property from the Company’s in-service portfolio. On October 2, 2023, step two of the restructuring was completed and included (i) the sale of the property, which resulted in a loss on the sale of approximately $1.5 million and assignment of the Senior Loan to the new owner, and (ii) the closing of the New Mezz Loan (See Note 9). In addition, the Company will continue to provide property management and leasing services to the property with the potential to earn additional incentive fees. Metropolitan Square is a 657,000 net rentable square foot premier workplace located at 655 15th Street, NW in the heart of downtown Washington, DC.
On October 31, 2023, a joint venture in which the Company has a 50% interest modified the lease of a third-party hotel developer/operator at its Hub on Causeway – Hotel Air Rights property. The third-party hotel developer/operator paid $4.5 million in connection with this modification to fulfill its obligation to repay the joint venture’s investment. This modification resulted in a reassessment of the lease classification per ASC 842. Based on this reassessment this lease was reclassified as a sales-type lease. The joint venture recorded a sales-type lease receivable of approximately $18.6 million. In addition, the joint venture recorded a gain on sales-type lease of approximately $2.7 million associated with the derecognition of the asset.
On December 14, 2023, the Company completed the acquisition of its joint venture partner’s 45% ownership interest in the joint venture that owns Santa Monica Business Park for a purchase price of $38.0 million and the Company acquired net working capital, including cash and cash equivalents of approximately $20 million. Prior to the acquisition, the Company had a 55% ownership interest in the joint venture and accounted for it under the equity method of accounting. The acquisition resulted in the Company having full ownership of the joint venture such that the Company now accounts for the assets, liabilities, and operations of it on a consolidated basis in its financials statements instead of under the equity method of accounting (See Note 3) and as a result recognized a gain on consolidation of approximately $29.9 million.
On December 14, 2023, the Company completed the acquisition of its joint venture partner’s approximate 29% ownership interest in the joint venture that owns 360 Park Avenue South for a purchase price of $1, increasing the Company’s ownership in the joint venture to approximately 71%. The Company also assumed the partner’s share of the joint venture’s cash and working capital aggregating approximately $25.4 million, as well as the partner’s
share of the outstanding $220.0 million mortgage debt. 360 Park Avenue South, a 20-story, approximately 450,000 square foot premier workplace, is currently under re-development.
Impairments
The Company’s investments in unconsolidated joint ventures are reviewed for indicators of impairment on a quarterly basis and the Company records impairment charges when events or circumstances indicate that a decline in the fair values below the carrying amounts has occurred and such decline is other-than-temporary. During the year ended December 31, 2023, the Company continued to evaluate declining market conditions and underlying key assumptions of certain investments in unconsolidated joint ventures, including the receipt and consideration of certain third-party joint venture property appraisals. Such evaluation of key impairment indicators resulted in the Company determining that the decline in value, for certain joint venture properties, was other-than-temporary and therefore the Company recorded impairment charges during the year ended December 31, 2023, as described below.
During the year ended December 31, 2023, a joint venture in which the Company has a 55% interest elected to pause vertical construction on Platform 16 in San Jose, California. Platform 16 was planned to be constructed in phases to best accommodate market demand. The first phase of the development project included the construction of an approximately 390,000 net rentable square foot premier workplace building and below-grade parking garage. The joint venture intends to complete the construction of the below-grade parking garage and building foundation elements over the next several months to facilitate a restart of construction in the future as demand improves. Upon electing to pause vertical construction, the Company performed an analysis to determine if there was an other-than temporary impairment. Based on the market rent assumptions and new expected timeline for completion of the project, as of June 30, 2023, the Company concluded there was not an other-than temporary impairment present. During the three months ended September 30, 2023, the real estate and leasing conditions in the San Jose, California market continued to deteriorate and the Company further extended its construction pause assumption. These conditions, combined with a decrease in market rent assumptions, resulted in the Company recognizing a non-cash impairment charge totaling approximately $155.2 million, which represented the decline in the fair value below the carrying value of the Company’s investment in the unconsolidated joint venture that owns Platform 16. The Company determined that its investment was categorized within Level 3 of the fair value hierarchy, as it utilized significant unobservable inputs in its assessment, including an exit capitalization rate of 6.0%, and a discount rate of 12.0%.
During the year ended December 31, 2023, the Company recognized a non-cash impairment charge totaling approximately $54.0 million, which represented the decline in the fair value below the carrying value of the Company’s investment in the unconsolidated joint venture that owns 360 Park Avenue South. The Company assessed the impairment and concluded that it was other than temporary. The Company determined that its investment was categorized within Level 3 of the fair value hierarchy, as it utilized significant unobservable inputs in its assessment, including an exit capitalization rate of 5.5% and leasing the currently available space over a longer period of time ending in 2026. 360 Park Avenue South is currently under redevelopment to be a premier workplace with approximately 450,000 net rentable square feet located in New York City, New York.
During the year ended December 31, 2023, the Company recognized a non-cash impairment charge totaling approximately $33.4 million, which represented the decline in the fair value below the carrying value of the Company’s investment in the unconsolidated joint venture that owns 200 Fifth Avenue. The Company assessed the impairment and concluded that it was other than temporary. The Company determined that its investment was categorized within Level 3 of the fair value hierarchy, as it utilized significant unobservable inputs in its assessment, including an exit capitalization rate of 5.0% and a discount rate of 8.0%. 200 Fifth Avenue is a premier workplace with approximately 855,000 net rentable square feet located in New York City, New York.
During the year ended December 31, 2023, the Company recognized a non-cash impairment charge totaling approximately $29.9 million, which represented the decline in the fair value below the carrying value of the Company’s investment in the unconsolidated joint venture that owns Safeco Plaza. The Company assessed the impairment and concluded that it was other than temporary. The Company determined that its investment was categorized within Level 3 of the fair value hierarchy, as it utilized significant unobservable inputs in its assessment, including an exit capitalization rate of 5.5%, a discount rate of 8.0% and a major lobby and repositioning renovation. Safeco Plaza is a premier workplace with approximately 780,000 net rentable square feet located in Seattle, Washington.