Investment In Unconsolidated Joint Ventures

3 Months Ended

Mar. 31, 2014

Investment In Unconsolidated Joint Ventures

4. Investment in Unconsolidated Joint Ventures

As of March 31, 2014, our investment in unconsolidated joint ventures consists of effective 50% interests in joint ventures that own a data center property at 2001 Sixth Avenue in Seattle, Washington, a data center property at 2020 Fifth Avenue in Seattle, Washington and a development property at 33 Chun Choi Street in Hong Kong, and a 20% interest in a joint venture with an investment fund managed by Prudential Real Estate Investors (PREI®). The following tables present summarized financial information for the joint ventures as of March 31, 2014 and December 31, 2013and for the three months ended March 31, 2014 and 2013 (unaudited, in thousands):

	As of March 31, 2014					Three Months Ended March 31, 2014
2014	Net Investment in Properties	Total Assets	Mortgage Loans	Total Liabilities	Equity / (Deficit)	Revenues	Property Operating Expense	Net Operating Income	Net Income (Loss)
Total unconsolidated joint ventures	$            625,075	$       728,716	$        360,581	$        458,986	$       269,730	$         21,919	$           (5,009)	$         16,910	$           5,894
Our investment in and share of equity in earnings    of unconsolidated joint ventures					$         81,411				$           2,581
	As of December 31, 2013					Three Months Ended March 31, 2013
2013	Net Investment in Properties	Total Assets	Mortgage Loans	Total Liabilities	Equity / (Deficit)	Revenues	Property Operating Expense	Net Operating Income	Net Income (Loss)
Total unconsolidated joint ventures	$            584,837	$       676,015	$        337,953	$        444,062	$       231,953	$         11,099	$           (2,687)	$           8,412	$           4,931
Our investment in and share of equity in earnings    of unconsolidated joint ventures					$         70,504				$           2,335

PREI ® Joint Venture

On March 5, 2014, we contributed the 636 Pierce Street property, which was acquired in December 2013, to the PREI® Joint Venture that was initially formed in September 2013.  The property was valued at approximately $40.4 million and subject to $26.1 million in debt, which the joint venture assumed.  PREI® contributed approximately $11.4 million in cash for their 80% share of the net asset value of $14.3 million.  Subsequent to the closing, the joint venture refinanced the existing debt with $23.0 million drawn from the joint venture’s bank facility.  Including the refinance costs, PREI® contributed $17.5 million for the 636 Pierce Street property, bringing their contributed capital in the joint venture to $164.8 million. 

The transaction produced a $1.9 million gain for the Company representing the difference between the $11.4 million of cash proceeds received by the Company for their 80% share of the net asset less the Company’s book value.

Differences between the Company’s investment in the joint venture and the amount of the underlying equity in net assets of the joint venture are due to basis differences resulting from the Company’s equity investment recorded at its historical basis versus the fair value of the Company’s contributed interest in the joint venture. Our proportionate share of the earnings or losses related to this unconsolidated joint venture is reflected as equity in earnings of unconsolidated joint ventures on the accompanying consolidated income statements.

Digital Realty Trust, L.P. [Member]

Investment In Unconsolidated Joint Ventures

4. Investment in Unconsolidated Joint Ventures

As of March 31, 2014, our investment in unconsolidated joint ventures consists of effective 50% interests in joint ventures that own a data center property at 2001 Sixth Avenue in Seattle, Washington, a data center property at 2020 Fifth Avenue in Seattle, Washington and a development property at 33 Chun Choi Street in Hong Kong, and a 20% interest in a joint venture with an investment fund managed by Prudential Real Estate Investors (PREI®). The following tables present summarized financial information for the joint ventures as of March 31, 2014 and December 31, 2013and for the three months ended March 31, 2014 and 2013 (unaudited, in thousands):

	As of March 31, 2014					Three Months Ended March 31, 2014
2014	Net Investment in Properties	Total Assets	Mortgage Loans	Total Liabilities	Equity / (Deficit)	Revenues	Property Operating Expense	Net Operating Income	Net Income (Loss)
Total unconsolidated joint ventures	$            625,075	$       728,716	$        360,581	$        458,986	$       269,730	$         21,919	$           (5,009)	$         16,910	$           5,894
Our investment in and share of equity in earnings    of unconsolidated joint ventures					$         81,411				$           2,581
	As of December 31, 2013					Three Months Ended March 31, 2013
2013	Net Investment in Properties	Total Assets	Mortgage Loans	Total Liabilities	Equity / (Deficit)	Revenues	Property Operating Expense	Net Operating Income	Net Income (Loss)
Total unconsolidated joint ventures	$            584,837	$       676,015	$        337,953	$        444,062	$       231,953	$         11,099	$           (2,687)	$           8,412	$           4,931
Our investment in and share of equity in earnings    of unconsolidated joint ventures					$         70,504				$           2,335

PREI ® Joint Venture

On March 5, 2014, we contributed the 636 Pierce Street property, which was acquired in December 2013, to the PREI® Joint Venture that was initially formed in September 2013.  The property was valued at approximately $40.4 million and subject to $26.1 million in debt, which the joint venture assumed.  PREI® contributed approximately $11.4 million in cash for their 80% share of the net asset value of $14.3 million.  Subsequent to the closing, the joint venture refinanced the existing debt with $23.0 million drawn from the joint venture’s bank facility.  Including the refinance costs, PREI® contributed $17.5 million for the 636 Pierce Street property, bringing their contributed capital in the joint venture to $164.8 million. 

The transaction produced a $1.9 million gain for the Company representing the difference between the $11.4 million of cash proceeds received by the Company for their 80% share of the net asset less the Company’s book value.

Differences between the Company’s investment in the joint venture and the amount of the underlying equity in net assets of the joint venture are due to basis differences resulting from the Company’s equity investment recorded at its historical basis versus the fair value of the Company’s contributed interest in the joint venture. Our proportionate share of the earnings or losses related to this unconsolidated joint venture is reflected as equity in earnings of unconsolidated joint ventures on the accompanying consolidated income statements.