Acquisitions and Developments in Progress

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisitions and Developments in Progress

ACQUISITIONS AND DEVELOPMENTS IN PROGRESS

Acquisitions

The Company closed on the following acquisitions during the year ended December 31, 2019:

Date	Property Name	Metropolitan Statistical Area (MSA)	Property Type	Square Footage	Acquisition Price
March 7, 2019	North Benson Center	Seattle	Multi-tenant retail	70,500	$	25,340
June 10, 2019	Paradise Valley Marketplace – Parcel	Phoenix	Land (a)	—	1,343
August 13, 2019	Southlake Town Square – Parcel	Dallas	Single-user parcel (b)	3,100	3,293
				73,600	$	29,976	(c)

(a) The Company acquired a parcel adjacent to its Paradise Valley Marketplace multi-tenant retail operating property. The total number of properties in the Company’s portfolio was not affected by this transaction.

(b) The Company acquired a single-user parcel at its Southlake Town Square multi-tenant retail operating property. The total number of properties in the Company’s portfolio was not affected by this transaction.

(c) Acquisition price does not include capitalized closing costs and adjustments totaling $316.

During the year ended December 31, 2018, the Company acquired One Loudoun Uptown for an acquisition price of $25,000. The 58-acre land parcel contains 32 acres that are developable and is located adjacent to One Loudoun Downtown, the Company’s multi-tenant retail operating property in Ashburn, Virginia. The acquisition price does not include capitalized closing costs and adjustments totaling $450. The acquired land parcel is classified as land held for development and is included in “Developments in progress” in the accompanying consolidated balance sheets. The total number of properties in the Company’s portfolio was not affected by this transaction.

The Company closed on the following acquisitions during the year ended December 31, 2017:

Date	Property Name	Metropolitan Statistical Area (MSA)	Property Type	Square Footage	Acquisition Price
January 13, 2017	Main Street Promenade (a)	Chicago	Multi-tenant retail	181,600	$	88,000
January 25, 2017	Carillon – Fee Interest	Washington, D.C.	Fee interest (b)	—	2,000
February 24, 2017	One Loudoun Downtown – Phase II	Washington, D.C.	Additional phase of multi-tenant retail (c)	15,900	4,128
April 5, 2017	One Loudoun Downtown – Phase III	Washington, D.C.	Additional phase of multi-tenant retail (c)	9,800	2,193
May 16, 2017	One Loudoun Downtown – Phase IV	Washington, D.C.	Development rights (c)	—	3,500
July 6, 2017	New Hyde Park Shopping Center	New York	Multi-tenant retail	32,300	22,075
August 8, 2017	One Loudoun Downtown – Phase V	Washington, D.C.	Additional phase of multi-tenant retail (c)	17,700	5,167
August 8, 2017	One Loudoun Downtown – Phase VI	Washington, D.C.	Additional phase of multi-tenant retail (c)	74,100	20,523
December 11, 2017	Plaza del Lago (d)	Chicago	Multi-tenant retail	100,200	48,300
December 19, 2017	Southlake Town Square – Outparcel	Dallas	Multi-tenant retail outparcel (e)	12,200	7,029
				443,800	$	202,915	(f)

(a) This property was acquired through two consolidated VIEs and was used to facilitate a 1031 Exchange.

(b) The multi-tenant retail operating property located in Largo, Maryland was previously subject to an approximately 70 acre long-term ground lease with a third party. The Company completed a transaction whereby it received the fee interest in approximately 50 acres of the underlying land in exchange for which (i) the Company paid $1,939 and (ii) the term of the ground lease with respect to the remaining approximately 20 acres was shortened to nine months. The Company derecognized building and improvements of $11,347 related to the remaining ground lease, recognized the fair value of land received of $15,200 and recorded a gain of $2,524, which was recognized during the three months ended December 31, 2017 upon the expiration of the ground lease on approximately 20 acres. The total number of properties in the Company’s portfolio was not affected by this transaction.

(c) The Company acquired the remaining five phases under contract, including the development rights for an additional 123 residential units for a total of 408 units, at One Loudoun Downtown. The total number of properties in the Company’s portfolio was not affected by these transactions.

(d) Plaza del Lago also contained 8,800 square feet of residential space, comprised of 15 multi-family rental units at acquisition, for a total of 109,000 square feet.

(e) The Company acquired a multi-tenant retail outparcel located at its Southlake Town Square multi-tenant retail operating property. The total number of properties in the Company’s portfolio was not affected by this transaction.

(f) Acquisition price does not include capitalized closing costs and adjustments totaling $2,506.

The following table summarizes the acquisition date values, before prorations, the Company recorded in conjunction with the acquisitions completed during the years ended December 31, 2019, 2018 and 2017 discussed above:

	2019			2018		2017
Land	$	14,819		$	—	$	50,876
Developments in progress	—			25,450		—
Building and other improvements, net	13,667			—		148,108
Acquired lease intangible assets (a)	2,040			—		15,608
Acquired lease intangible liabilities (b)	(234		)	—		(8,095		)
Other liabilities	—			—		(1,076		)
Net assets acquired	$	30,292		$	25,450	$	205,421

(a) The weighted average amortization period for acquired lease intangible assets is six years and seven years for acquisitions completed during the years ended December 31, 2019 and 2017, respectively.

(b) The weighted average amortization period for acquired lease intangible liabilities is five years and 13 years for acquisitions completed during the years ended December 31, 2019 and 2017, respectively.

These acquisitions were funded using a combination of available cash on hand, proceeds from dispositions and proceeds from the Company’s unsecured revolving line of credit. All of the acquisitions completed during 2019, 2018 and 2017 were considered asset acquisitions and, as such, transaction costs were capitalized upon closing.

Developments in Progress

The carrying amount of the Company’s developments in progress are as follows:

		December 31,
Property Name	MSA	2019		2018
Active expansion and redevelopment projects:
Circle East (a)	Baltimore	$	33,628	$	22,383
Plaza del Lago (b)	Chicago	—		536
One Loudoun Downtown (c)	Washington, D.C.	27,868		—
Carillon (d)	Washington, D.C.	26,407		—
		87,903		22,919
Land held for future development:
One Loudoun Uptown (e)	Washington, D.C.	25,450		25,450
Total developments in progress		$	113,353	$	48,369

(a) During the year ended December 31, 2018, the Company received net proceeds of $11,820 in connection with the sale of air rights to a third party to develop multi-family rental units at Circle East, which is shown net in the “Developments in progress” balance as of December 31, 2019 and 2018 in the accompanying consolidated balance sheets.

(b) During the three months ended September 30, 2019, the Company placed the Plaza del Lago multi-family rental redevelopment project in service and reclassified the related costs from “Developments in progress” into “Building and other improvements” in the accompanying consolidated balance sheets.

(c) During the three months ended June 30, 2019, the Company commenced the active development of Pads G & H at One Loudoun Downtown, at which time all predevelopment costs related to the development as well as the Company’s historical basis in the pads were reclassified

from “Other assets, net” and “Investment properties,” respectively, to “Developments in progress” in the accompanying consolidated balance sheets.

(d) During the three months ended September 30, 2019, the Company commenced the active redevelopment at Carillon, at which time the Company (i) recorded $26,330 of accelerated depreciation related to the write-off of assets taken out of service due to the demolition of existing structures in connection with the redevelopment and (ii) reclassified all predevelopment costs related to the redevelopment as well as the Company’s historical basis in the phases to be developed from “Other assets, net” and “Investment properties,” respectively, to “Developments in progress” in the accompanying consolidated balance sheets.

(e) During 2018, the Company acquired One Loudoun Uptown, a 58-acre land parcel that contains 32 acres that are developable.

Variable Interest Entities

During the year ended December 31, 2019, the Company entered into a joint venture related to the development, ownership and operation of the medical office building portion of the redevelopment project at Carillon, of which joint venture the Company owns 95%. During the year ended December 31, 2018, the Company entered into two joint ventures related to the development, ownership and operation of (i) the multi-family rental portion of the expansion project at One Loudoun Downtown – Pads G & H and (ii) the multi-family rental redevelopment project at Carillon, of which joint ventures the Company owns 90% and 95%, respectively.

The joint ventures are considered VIEs primarily because the Company’s joint venture partners do not have substantive kick-out rights or substantive participating rights. The Company is considered the primary beneficiary as it has a controlling financial interest in each joint venture. As such, the Company has consolidated these joint ventures and presented the joint venture partners’ interests as noncontrolling interests.

As of December 31, 2019 and 2018, the Company had recorded the following amounts related to the consolidated joint ventures:

	December 31, 2019								December 31, 2018
	One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total		One Loudoun Downtown – Pads G & H		Carillon – Phase One Multi-family Rental		Carillon – Phase One Medical Office		Total
Net investment properties	$	8,830	$	2,940	$	675	$	12,445	$	—	$	—	$	—	$	—
Other assets, net	$	164	$	—	$	—	$	164	$	579	$	685	$	—	$	1,264
Other liabilities	$	1,546	$	32	$	129	$	1,707	$	165	$	263	$	—	$	428
Noncontrolling interests	$	1,869	$	1,454	$	273	$	3,596	$	207	$	211	$	—	$	418

Development costs are funded by the partners, including the Company, and/or construction loan financing throughout the construction period. Under terms defined in the joint venture agreements, after construction completion and stabilization of the respective development project, the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the respective joint venture at fair value. The Company has not provided financial support to these VIEs in excess of any amounts that it is contractually required to provide. There was no income from the joint venture projects during the years ended December 31, 2019 and 2018 and, as such, no income was attributed to the noncontrolling interests.

During the year ended December 31, 2017, the Company entered into an agreement with a qualified intermediary related to a 1031 Exchange. The Company loaned $87,452 to the VIEs to acquire Main Street Promenade. The 1031 Exchange was completed during the year ended December 31, 2017 and, in accordance with applicable provisions of the Code, within 180 days after the acquisition date of the property. At the completion of the 1031 Exchange, the sole membership interests of the VIEs were assigned to the Company in satisfaction of the outstanding loan, resulting in the entities being wholly owned by the Company and no longer considered VIEs.

During 2017, prior to the completion of the 1031 Exchange, the Company was deemed to be the primary beneficiary of the VIEs related to the 1031 Exchange as it had the ability to direct the activities of the VIEs that most significantly impacted their economic performance and it had all of the risks and rewards of ownership. Accordingly, the Company consolidated the VIEs related to the 1031 Exchange. No value or income was attributed to the noncontrolling interests during the year ended December 31, 2017. The assets of the VIEs related to the 1031 Exchange consisted of the investment property that was operated by the Company.