Investments in Unconsolidated Entities (Tables)

9 Months Ended

Sep. 30, 2012

Investments in unconsolidated entities at September 30, 2012 and December 31, 2011 consist of the following (in thousands):


	September 30, 2012		December 31, 2011
CBRE Strategic Partners Asia	$	7,779	$	8,381
Duke Joint Venture		350,896		377,145
Afton Ridge Joint Venture		17,405		18,274
UK JV		37,543		26,590
European JV		74,373		107,241

	$	487,996	$	537,631

Summary of Investments in Unconsolidated Entities

The following is a summary of the investments in unconsolidated entities for the nine months ended September 30, 2012 and the year ended December 31, 2011 (in thousands):


	September 30, 2012			December 31, 2011
Investment Balance, January 1	$	537,631		$	410,062
Contributions		12,793			149,132
Company’s Equity in Net Income (including adjustments for basis differences)		2,556			3,590
Other Comprehensive Loss of Unconsolidated Entities		(2,014	)		(1,487	)
Distributions		(62,970	)		(23,666	)

Investment Balance, End of Period	$	487,996		$	537,631

6. Acquisition Related Intangible Assets And Liabilities

Our acquisition related intangible assets and liabilities are included in the consolidated balance sheets as acquired in-place lease value, acquired above-market lease value and acquired below-market lease value.

The following is a schedule of future amortization of acquisition related intangible assets and liabilities as of September 30, 2012 (in thousands):


	Assets				Liabilities
	Above-Market Lease Value		Acquired In-Place Lease Value		Below-Market Lease Value		Above-Market Ground Lease Obligations
2012 (Three months ending December 31, 2012)	$	1,928	$	6,967	$	843	$	18
2013		6,897		23,600		2,787		71
2014		5,376		21,174		2,688		71
2015		5,061		19,349		2,527		71
2016		2,169		15,205		2,505		71
2017		1,840		14,469		2,445		71
Thereafter		5,707		49,306		11,062		1,056

	$	28,978	$	150,070	$	24,857	$	1,429

The amortization of the above- and below-market lease values included in rental revenue was ($1,903,000) and $2,093,000, respectively, for the three months ended September 30, 2012, and ($1,845,000) and $1,128,000, respectively, for the three months ended September 30, 2011. The amortization of in-place lease value included in amortization expense was $7,420,000 and $6,761,000 for the three months ended September 30, 2012 and 2011, respectively. The amortization of above-market ground lease obligations was $18,000 and $0 for the three months ended September 30, 2012 and 2011, respectively.

The amortization of the above- and below-market lease values included in rental revenue was ($5,637,000) and $4,326,000, respectively, for the nine months ended September 30, 2012, and ($4,540,000) and $3,053,000, respectively, for the nine months ended September 30, 2011. The amortization of in-place lease value included in amortization expense was $21,544,000 and $17,055,000 for the nine months ended September 30, 2012 and 2011, respectively. The amortization of above-market ground lease obligations was $53,000 and $0 for the nine months ended September 30, 2012 and 2011, respectively.

Schedule of Future Amortization of Acquisition Related Intangible Assets And Liabilities

The following is a schedule of future amortization of acquisition related intangible assets and liabilities as of September 30, 2012 (in thousands):


	Assets				Liabilities
	Above-Market Lease Value		Acquired In-Place Lease Value		Below-Market Lease Value		Above-Market Ground Lease Obligations
2012 (Three months ending December 31, 2012)	$	1,928	$	6,967	$	843	$	18
2013		6,897		23,600		2,787		71
2014		5,376		21,174		2,688		71
2015		5,061		19,349		2,527		71
2016		2,169		15,205		2,505		71
2017		1,840		14,469		2,445		71
Thereafter		5,707		49,306		11,062		1,056

	$	28,978	$	150,070	$	24,857	$	1,429

CBRE Strategic Partners Asia [Member]

Consolidated Balance Sheet

Consolidated Balance Sheets of CBRE Strategic Partners Asia as of September 30, 2012 and December 31, 2011 (in thousands):


	September 30, 2012		December 31, 2011
Assets
Real Estate	$	159,433	$	215,948
Other Assets		54,262		11,545

Total Assets	$	213,695	$	227,493

Liabilities and Equity
Notes Payable	$	44,329	$	45,466
Other Liabilities		12,930		13,948

Total Liabilities		57,259		59,414

Company’s Equity		7,779		8,383
Other Investors’ Equity		148,657		159,696

Total Liabilities and Equity	$	213,695	$	227,493

Consolidated Statement of Operations

Consolidated Statements of Operations of CBRE Strategic Partners Asia for the three and nine months ended September 30, 2012 and 2011 (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012			2011
Total Revenues and Appreciation (Depreciation)	$	1,930	$	(2,184	)	$	(1,142	)	$	(5,740	)
Total Expenses		1,096		1,410			3,201			5,249

Net (Loss) Income		834		(3,594	)		(4,343	)		(10,989	)

Company’s Equity in Net (Loss) Income	$	38	$	(210	)	$	(234	)	$	(603	)

Duke Joint Venture [Member]

Consolidated Balance Sheet

Consolidated Balance Sheet of the Duke joint venture as of September 30, 2012 (in thousands):


	September 30, 2012		REIT Basis Adjustments⁽¹⁾		Total
Assets
Real Estate Net	$	786,278	$	1,950	$	788,228
Other Assets		152,951		0		152,951

Total Assets	$	939,229	$	1,950	$	941,179

Liabilities and Equity
Notes Payable	$	473,919	$	0	$	473,919
Other Liabilities		29,128		0		29,128

Total Liabilities		503,047		0		503,047

Company’s Equity		348,946		1,950		350,896
Other Investor’s Equity		87,236		0		87,236

Total Liabilities and Equity	$	939,229	$	1,950	$	941,179

⁽¹⁾

REIT Basis Adjustments include those costs incurred by the Company outside of the Duke joint venture that are directly capitalizable to its investment in real estate assets acquired within the Duke joint venture including acquisition costs paid to our former investment advisor prior to January 1, 2009. Thereafter such acquisition fees were expensed as incurred.

Consolidated Balance Sheet of the Duke joint venture as of December 31, 2011 (in thousands):


	December 31, 2011		REIT Basis Adjustments⁽¹⁾		Total
Assets
Real Estate Net	$	807,959	$	2,052	$	810,011
Other Assets		163,709		0		163,709

Total Assets	$	971,668	$	2,052	$	973,720

Liabilities and Equity
Notes Payable	$	478,482	$	0	$	478,482
Other Liabilities		24,320		0		24,320

Total Liabilities		502,802		0		502,802

Company’s Equity		375,093		2,052		377,145
Other Investor’s Equity		93,773		0		93,773

Total Liabilities and Equity	$	971,668	$	2,052	$	973,720

⁽¹⁾

Consolidated Statement of Operations

Consolidated Statement of Operations of the Duke joint venture for the three and nine months ended September 30, 2012 and 2011 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total Revenues	$	31,271		$	30,625		$	93,551		$	80,570
Operating Expenses		10,621			10,166			31,234			26,152
Interest		6,125			6,022			18,429			15,230
Depreciation and Amortization		14,909			14,313			44,700			36,150

Net (Loss) Income	$	(384	)	$	124		$	(812	)	$	3,038

Company’s Share in Net Income	$	(307	)	$	99		$	(649	)	$	2,430
Adjustments for REIT Basis		(34	)		(30	)		(102	)		(88	)

Company’s Equity in Net (Loss) Income	$	(341	)	$	69		$	(751	)	$	2,342

Detailed Information Concerning Properties Held

The following table provides further detailed information concerning the properties held in the Duke joint venture at September 30, 2012:


Property and Market	Property Type	Net Rentable Square Feet		Primary Tenants	Lease Expiration		Approximate Purchase Price⁽¹⁾		Pro Rata Share of Approximate Purchase Price⁽²⁾		Approximate Debt Financing⁽³⁾		Acquisition Fees⁽⁴⁾

Buckeye Logistics Center, Phoenix, AZ	Warehouse/ Distribution		1,009,351	Amazon.com⁽⁶⁾		09/2021	$	65,131,000	$	52,104,800	$	20,000,000	$	349,000

201 Sunridge Blvd., Dallas, TX	Warehouse/ Distribution		822,550	Unilever⁽⁵⁾		09/2018		31,626,000		25,300,800		19,400,000		253,000

12200 President’s Court, Jacksonville, FL	Warehouse/ Distribution		772,210	Unilever⁽⁵⁾		09/2018		36,956,000		29,564,800		21,600,000		296,000

AllPoints at Anson Bldg. 1, Indianapolis, IN	Warehouse/ Distribution		1,036,573	Amazon.com⁽⁶⁾		04/2021		52,819,000		42,255,200		17,000,000		267,000

Aspen Corporate Center 500, Nashville, TN	Office		180,147	Verizon Wireless⁽⁷⁾		10/2018		36,989,000		29,591,200		21,200,000		297,000

125 Enterprise Parkway, Columbus, OH	Warehouse/ Distribution		1,142,400	Kellogg’s		03/2019		47,905,000		38,324,000		26,800,000		383,000

AllPoints Midwest Bldg. 1, Indianapolis, IN	Warehouse/ Distribution		1,200,420	Prime Distribution		05/2019		51,800,000		41,440,000		24,000,000		414,000

22535 Colonial Pkwy., Houston, TX	Office		89,750	Det Norske Veritas		06/2019		14,700,000		11,760,000		8,245,000		176,000

Celebration Office Center III, Orlando, FL	Office		100,924	Disney Vacation Development		04/2016		17,050,000		13,640,000		9,215,000		205,000

Fairfield Distribution Ctr. IX, Tampa, FL	Warehouse/ Distribution		136,212	Iron Mountain		08/2025		9,300,000		7,440,000		4,579,000		112,000

Northpoint III, Orlando, FL	Office		108,499	Florida Power Corporation		10/2021		18,240,000		14,592,000		10,670,000		219,000

Goodyear Crossing Ind. Pk II, Phoenix, AZ	Warehouse/ Distribution		820,384	Amazon.com⁽⁶⁾		09/2019		45,645,000		36,516,000		20,370,000		548,000

3900 N. Paramount Pkwy., Raleigh, NC	Office		100,987	PPD Development		11/2023		13,969,000		11,175,200		8,003,000		168,000

3900 S. Paramount Pkwy., Raleigh, NC	Office		119,170	PPD Development/ LSSI		11/2023 10/2015		16,319,000		13,055,200		8,003,000		196,000

1400 Perimeter Park Drive, Raleigh, NC	Office		44,916	PPD Development		11/2023		4,962,000		3,969,600		2,425,000		60,000

Miramar I, Miami, FL⁽⁸⁾	Office		94,060	DeVry		06/2021		17,056,000		13,644,800		9,506,000		0

Miramar II, Miami, FL⁽⁸⁾	Office		128,540	Royal Caribbean		05/2016		26,124,000		20,899,200		12,804,000		0

McAuley Place, Cincinnati, OH	Office		190,096	Mercy Health Partners of South West Ohio^(9)(10)		08/2023		35,000,000		28,000,000		13,666,000		420,000

Easton III, Columbus, OH	Office		135,485	Lane Bryant^(9)(11)		01/2019		18,000,000		14,400,000		6,699,000		216,000

Point West I, Dallas, TX	Office		182,700	American Home Mortgage Services, Inc^(9)(12)		12/2016		29,500,000		23,600,000		11,448,000		354,000

Sam Houston Crossing I, Houston, TX	Office		159,175	AMEC Paragon, Inc.^(9)(13)		05/2018		25,500,000		20,400,000		10,820,000		306,000

Regency Creek I, Raleigh, NC	Office		122,087	ABB, Inc.^(9)(14)		08/2017		22,500,000		18,000,000		11,105,000		270,000

533 Maryville Centre, St. Louis, MO	Office		125,296	Eveready Battery Company, Inc.^(9)(15)		04/2021		23,878,000		19,102,400		13,320,000		287,000

555 Maryville Centre, St. Louis, MO	Office		127,082	Eveready Battery Company, Inc.^(9)(15)		04/2021		19,472,000		15,577,600		10,863,000		234,000

Norman Pointe I, Minneapolis, MN	Office		212,722	NCS Pearson, Inc.^(9)(16)		05/2017		42,600,000		34,080,000		20,907,000		511,200

Norman Pointe II, Minneapolis MN	Office		324,296	General Services Administration^(9)(17)		05/2016		46,900,000		37,520,000		23,018,000		562,800

				Hartford Fire Insurance Co^(9)(18)		06/2013

The Landings I, Cincinnati, OH	Office		175,695	Citicorp North America^(9)(19)		01/2022		29,659,500		23,727,600		15,734,000		355,914

The Landings II, Cincinnati, OH	Office		175,076	Multi-Tenant		—		26,160,500		20,928,400		13,878,000		313,926

One Easton Oval, Columbus, OH	Office		125,031	Multi-Tenant		—		11,911,000		9,528,800		0		142,932

Two Easton Oval, Columbus, OH	Office		128,674	Multi-Tenant		—		12,744,000		10,195,200		0		152,928

Weston Pointe I, Ft. Lauderdale, FL	Office		97,579	Multi-Tenant		—		19,384,250		15,507,400		9,304,000		232,611

Weston Pointe II, Ft. Lauderdale, FL	Office		97,180	Multi-Tenant		—		23,375,950		18,700,760		11,220,000		280,511

Weston Pointe III, Ft, Lauderdale, FL	Office		97,178	American Intercontinental University^(9)(20)		09/2015		23,583,550		18,866,840		11,320,000		283,002

Weston Pointe IV, Ft. Lauderdale, FL	Office		96,175	General Services Administration^(9)(17)		04/2019		28,256,250		22,605,000		13,562,000		339,075

One Conway Park, Chicago, IL	Office		105,000	Multi-Tenant		—		15,400,000		12,320,000		0		184,800

West Lake at Conway, Chicago, IL	Office		98,304	Multi-Tenant		—		17,575,000		14,060,000		9,549,000		210,900

Atrium I, Columbus, OH	Office		315,102	Nationwide Mutual Insurance Co^(9)(21)(22)		05/2019		45,250,000		36,200,000		23,686,000		543,000

							$	1,023,241,000	$	818,592,800	$	473,919,000	$	10,143,599

⁽¹⁾	Approximate total purchase price including the AllPoints at Anson Bldg. 1 and Buckeye Logistics Center expansion costs, exclusive of closing costs, paid by the Duke joint venture for each of these properties.

⁽²⁾	Pro rata share of approximate purchase price is at our pro rata share of effective ownership for each of these properties.

⁽³⁾	Approximate debt financing net of amortization.

⁽⁴⁾	Acquisition fees paid to our former investment advisor are included in the total acquisition cost for the properties acquired prior to January 1, 2009, but are included as acquisition expenses for properties acquired subsequent to December 31, 2008.

⁽⁵⁾	Our tenant CONOPCO, Inc. is a wholly-owned subsidiary of Unilever United States, Inc., which is wholly-owned by Unilever N.V. and Unilever PLC, together Unilever.

⁽⁶⁾	Our tenants Amazon.com.indc, LLC, Amazon.com.axdc, Inc. and Amazon.com.azdc, Inc. are wholly-owned subsidiaries of Amazon.com. AllPoints at Anson Bldg. 1, Buckeye Logistics Center and Goodyear Crossing Ind. Park II are three of Amazon’s largest fulfillment centers in North America.

⁽⁷⁾	Our tenant Cellco Partnership does business as Verizon Wireless.

⁽⁸⁾	Consolidated properties acquired on December 31, 2009 and contributed to the Duke joint venture on March 31, 2010.

⁽⁹⁾	This tenant currently occupies more than 50,000 of net rentable square feet.

⁽¹⁰⁾	Mercy Health Partners of South West Ohio is a healthcare system comprised of five hospitals and 38 physician practices serving the greater Cincinnati, Ohio area.

⁽¹¹⁾	Lane Bryant, a division of Charming Shoppes, Inc. (NASDAQ:CHRS), is a chain of women’s retail clothing stores with over 850 stores in 48 states.

⁽¹²⁾	American Home Mortgage Services, Inc. is one of the country’s largest servicers of Alt-A and subprime loans on behalf of banks and other investors.

⁽¹³⁾	AMEC Paragon, Inc. is a provider of project management and engineering services to the oil and gas industry.

⁽¹⁴⁾	ABB, Inc. is a leader in power and automation technologies for utility and industrial customers.

⁽¹⁵⁾	Eveready Battery Company, Inc. is a division of Energizer Holdings, Inc. (NYSE:ENR), which manufactures batteries and lighting products.

⁽¹⁶⁾	NCS Pearson, Inc. provides services, software, systems, and Internet-based technologies for the collection management, and interpretation of data.

⁽¹⁷⁾

The General Services Administration is an independent agency of the Federal Government of the United States of America, which supplies products and communications for U.S. government offices, provides transportation and office space to federal employees and develops government-wide cost-minimizing policies and other management tasks.

⁽¹⁸⁾	Hartford Fire Insurance Company is a subsidiary of the Hartford Financial Services Group and one on the world’s leading providers of fire, marine and casualty insurance.

⁽¹⁹⁾	Citicorp North America, Inc. provides regional banking services and is a subsidiary of Citigroup, Inc. (NYSE: C).

⁽²⁰⁾	American Intercontinental University is an international for profit university with both physical and online campuses.

⁽²¹⁾	Nationwide Mutual Insurance Company is one of the nation’s largest insurance and financial services companies.

⁽²²⁾	This tenant has two separate leases within this property.

Afton Ridge Joint Venture [Member]

Consolidated Balance Sheet

Consolidated Balance Sheet of Afton Ridge as of September 30, 2012 (in thousands):


	September 30, 2012		REIT Basis Adjustments⁽¹⁾		Total
Assets
Real Estate Net	$	43,835	$	570	$	44,405
Other Assets		3,097		0		3,097

Total Assets	$	46,932	$	570	$	47,502

Liabilities and Equity
Note Payable	$	25,500	$	0	$	25,500
Other Liabilities		2,726		0		2,726

Total Liabilities		28,226		0		28,226

Company’s Equity		16,835		570		17,405
Other Investor’s Equity		1,871		0		1,871

Total Liabilities and Equity	$	46,932	$	570	$	47,502

⁽¹⁾

REIT Basis Adjustments include those costs incurred by the Company outside of Afton Ridge that are directly capitalizable to its investment in real estate assets acquired within Afton Ridge including acquisition costs paid to our former investment advisor prior to January 1, 2009. Thereafter such acquisitions fees were expensed as incurred.

Consolidated Balance Sheet of Afton Ridge as of December 31, 2011 (in thousands):


	December 31, 2011		REIT Basis Adjustments⁽¹⁾		Total
Assets
Real Estate Net	$	44,839	$	585	$	45,424
Other Assets		3,064		0		3,064

Total Assets	$	47,903	$	585	$	48,488

Liabilities and Equity
Note Payable	$	25,500	$	0	$	25,500
Other Liabilities		2,749		0		2,749

Total Liabilities		28,249		0		28,249

Company’s Equity		17,689		585		18,274
Other Investor’s Equity		1,965		0		1,965

Total Liabilities and Equity	$	47,903	$	585	$	48,488

⁽¹⁾

REIT Basis Adjustments include those costs incurred outside of Afton Ridge that are directly capitalizable to its investment in real estate assets acquired within Afton Ridge including acquisition costs paid to our former investment advisor prior to January 1, 2009. Thereafter such acquisitions fees were expensed as incurred.

Consolidated Statement of Operations

Consolidated Statements of Operations of Afton Ridge for the three and nine months ended September 30, 2012 and 2011 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total Revenues	$	1,219		$	1,258		$	3,869		$	3,904
Operating Expenses		286			335			990			1,048
Interest		376			376			1,128			1,128
Depreciation and Amortization		446			462			1,369			1,377

Net Income	$	111		$	85		$	382		$	351

Company’s Share in Net Income	$	100		$	77		$	344		$	316
Adjustments for REIT Basis		(5	)		(5	)		(14	)		(14	)

Company’s Equity in Net Income	$	95		$	72		$	330		$	302

UK JV [Member]

Consolidated Balance Sheet

Consolidated Balance Sheets of UK JV as of September 30, 2012 and December 31, 2011 (in thousands):


	September 30, 2012		December 31, 2011
Assets
Real Estate Net	$	46,047	$	32,545
Other Assets		2,755		1,788

Total Assets	$	48,802	$	34,333

Liabilities and Equity
Other Liabilities	$	1,874	$	1,095

Total Liabilities		1,874		1,095

Company’s Equity		37,543		26,590
Other Investor’s Equity		9,385		6,648

Total Liabilities and Equity	$	48,802	$	34,333

Consolidated Statement of Operations

Consolidated Statements of Operations of UK JV for the three and nine months ended September 30, 2012 and 2011 (in thousands);


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Total Revenues	$	1,159	$	860	$	3,139	$	2,514
Operating Expenses		231		166		1,135		338
Depreciation and Amortization		494		359		1,343		1,075

Net Income	$	434	$	335	$	661	$	1,101

Company’s Equity in Net Income	$	347	$	268	$	529	$	881

Detailed Information Concerning Properties Held


Property and Market	Year Built		Property Type		Tenant	Net Rentable Sq. Feet		Percentage Leased			Lease Expiration		Approximate Total Acquisition Cost (in thousands)
Amber Park, Nothingham, UK		1997		Warehouse/ Distribution	UniDrug Distribution Group		208,423		100	%		3/2017	$	15,642
Brackmills, Northampton, UK		1984		Warehouse/ Distribution	GE Lighting Operations Limited		186,618		100	%		3/2017	$	16,759
Valley Park, Unit D, Rugby, UK		2000		Warehouse/ Distribution	Exel Europe, Ltd.		146,491		100	%		9/2016	$	12,808

European JV [Member]

Consolidated Balance Sheet

Consolidated Balance Sheets of European JV as of September 30, 2012 and December 31, 2011 (in thousands):


	September 30, 2012		December 31, 2011
Assets
Real Estate Net	$	126,478	$	131,783
Other Assets		9,077		11,552

Total Assets	$	135,555	$	143,335

Liabilities and Equity
Notes Payable	$	39,943	$	9,284
Other Liabilities		2,645		0

Total Liabilities		42,588		9,284

Company’s Equity		74,373		107,241
Other Investor’s Equity		18,594		26,810

Total Liabilities and Equity	$	135,555	$	143,335

Consolidated Statement of Operations

Consolidated Statements of Operations of European JV for the three and nine months ended September 30, 2012 and 2011 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Total Revenues	$	2,845	$	1,590	$	8,704	$	4,737
Operating Expenses		382		280		1,154		836
Interest		165		0		165		0
Depreciation and Amortization		1,313		796		4,032		2,352

Net Income	$	985	$	514	$	3,353	$	1,549

Company’s Equity in Net Income	$	788	$	411	$	2,682	$	1,238

Detailed Information Concerning Properties Held


Property and Market	Year Built	Property Type	Tenant	Net Rentable Sq. Feet		Percentage Leased			Lease Expiration		Approximate Total Acquisition Cost (in thousands)
Düren, Rhine-Ruhr, Germany	2008	Warehouse/ Distribution	Metsä Tissue GmbH		391,494		100	%		11/2013	$	16,435
Schönberg, Hamburg, Germany	2009	Warehouse/ Distribution	LK Logistik GmbH		453,979		100	%		5/2017	$	17,274
Langenbach, Munich, Germany	2010	Warehouse/ Distribution	DSV Stuttgart GmbH & Co. KG		225,106		100	%		7/2015	$	23,216
Graben Distribution Center I, Munich, Germany	2011	Warehouse/ Distribution	Amazon Fulfillment GmbH		1,017,868		100	%		4/2022	$	68,703
Graben Distribution Center II, Munich, Germany	2011	Warehouse/ Distribution	Deutche Post Immobolien GmbH		73,367		100	%		11/2021	$	8,585

- Definition

Tabular disclosure of equity method investments in common stock. The disclosure may include: (a) the name of each investee or group of investments for which combined disclosure is appropriate, (2) the percentage ownership of common stock, (3) the difference, if any, between the carrying amount of an investment and the value of the underlying equity in the net assets and the accounting treatment of difference, if any, and (4) the aggregate value of each identified investment based on its quoted market price, if available.

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