Investments in Unconsolidated Real Estate Ventures (Tables)

9 Months Ended

Sep. 30, 2023

Investments in Unconsolidated Real Estate Ventures

Summary of unconsolidated investments

The following is a summary of the composition of our investments in unconsolidated real estate ventures:

	Effective
	Ownership
Real Estate Venture	Interest (1)	September 30, 2023		December 31, 2022
		(In thousands)
Prudential Global Investment Management	50.0%	$	196,389	$	203,529
J.P. Morgan Global Alternatives ("J.P. Morgan") (2)	50.0%		69,860		64,803
4747 Bethesda Venture (3)	20.0%		13,349		—
Brandywine Realty Trust	30.0%		13,756		13,678
CBREI Venture (4)	9.9%		464		12,516
Landmark Partners (5)	18.0%		1,992		4,809
Other			587		546
Total investments in unconsolidated real estate ventures (6) (7)		$	296,397	$	299,881

(1) Reflects our effective ownership interests in the underlying real estate as of September 30, 2023. We have multiple investments with certain venture partners in the underlying real estate.

(2) J.P. Morgan is the advisor for an institutional investor.

(3) In March 2023, we sold an 80.0% interest in 4747 Bethesda Avenue for a gross sales price of $196.0 million, representing a gross valuation of $245.0 million. In connection with the transaction, the real estate venture assumed the related $175.0 million mortgage loan.

(4) In connection with the preparation and review of the third quarter 2023 financial statements, an impairment loss of $3.3 million associated with a commercial asset located in Washington, D.C. was included in "Loss from unconsolidated real estate ventures, net" in our statements of operations for the three and nine months ended September 30, 2023.

(5) Excludes the L'Enfant Plaza Assets for which we have a zero investment balance and discontinued applying the equity method of accounting after September 30, 2022.

(6) Excludes (i) 10.0% subordinated interest in one commercial building, (ii) the Fortress Assets and (iii) the L'Enfant Plaza Assets held through unconsolidated real estate ventures. For more information see Note 1. Also, excludes our interest in an investment in the real estate venture that owns 1101 17th Street for which we have discontinued applying the equity method of accounting since June 30, 2018 because we received distributions in excess of our contributions and share of earnings, which reduced our investment to zero; further, we are not obligated to provide for losses, have not guaranteed its obligations or otherwise committed to provide financial support.

(7) As of September 30, 2023 and December 31, 2022, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $6.9 million and $8.9 million, resulting principally from capitalized interest and our zero investment balance in certain real estate ventures.

	Weighted
	Average Effective
	Interest Rate (1)	September 30, 2023		December 31, 2022
		(In thousands)
Variable rate (2)	6.19%	$	278,175	$	184,099
Fixed rate (3)	4.13%		60,000		60,000
Mortgage loans (4)			338,175		244,099
Unamortized deferred financing costs and premium / discount, net			(9,252)		(411)
Mortgage loans, net (4) (5)		$	328,923	$	243,688

(1) Weighted average effective interest rate as of September 30, 2023.

(2) Includes variable rate mortgages with interest rate cap agreements.

(3) Includes variable rate mortgages with interest rates fixed by interest rate swap agreements.

(4) Excludes mortgage loans related to the Fortress Assets and the L'Enfant Plaza Assets.

(5) See Note 17 for additional information on guarantees of the debt of certain of our unconsolidated real estate ventures.

	September 30, 2023		December 31, 2022
	(In thousands)
Combined balance sheet information: (1)
Real estate, net	$	879,369	$	888,379
Other assets, net		170,007		160,015
Total assets	$	1,049,376	$	1,048,394
Mortgage loans, net	$	328,923	$	243,688
Other liabilities, net		47,424		54,639
Total liabilities		376,347		298,327
Total equity		673,029		750,067
Total liabilities and equity	$	1,049,376	$	1,048,394

	Three Months Ended September 30,					Nine Months Ended September 30,
	2023		2022		X	2023		2022
	(In thousands)
Combined income statement information: (1)
Total revenue	$	23,570	$	40,881		$	68,555	$	125,135
Operating income (loss) (2)		(20,584)		(7,468)			(13,005)		77,066
Net income (loss) (2)		(27,622)		(15,034)			(31,557)		49,376

(1) Excludes amounts related to the Fortress Assets. Excludes combined balance sheet information for both periods presented and combined income statement information for the three and nine months ended September 30, 2023 related to the L'Enfant Plaza Assets as we discontinued applying the equity method of accounting after September 30, 2022.

(2) Includes the gain on the sale of Stonebridge at Potomac Town Center of $4.6 million for the three and nine months ended September 30, 2023. Includes the gain on the sale of various assets totaling $77.4 million during the nine months ended September 30, 2022. Includes impairment losses of $30.1 million and $16.1 million during the three and nine months ended September 30, 2023 and 2022.

Summary of unconsolidated investments disposition activity

						Mortgage		Proportionate
	Real Estate			Gross		Loans		Share of
	Venture		Ownership	Sales		Repaid by		Aggregate
Date Disposed	Partner	Assets	Percentage	Price		Venture		Gain
				(In thousands)
August 24, 2023	CBREI Venture	Stonebridge at Potomac Town Center	10.0%	$	172,500	$	79,600	$	641