REAL ESTATE INVESTMENTS

6 Months Ended

Jun. 30, 2023

3. REAL ESTATE INVESTMENTS

As of June 30, 2023 and December 31, 2022, the gross carrying value of the operating properties was as follows (in thousands):


	June 30, 2023		December 31, 2022
Land	$	398,536	$	403,998
Building and improvements	2,725,168		2,760,357
Tenant improvements	473,507		452,885
Operating properties	$	3,597,211	$	3,617,240
Assets held for sale - real estate investments	52,664		—
Total	$	3,649,875	$	3,617,240

Dispositions

During the first quarter of 2023, the Company deconsolidated $7.8 million recorded in “Prepaid leasehold interests in land held for development, net” on the consolidated balance sheets. This deconsolidation reflects the Company’s contribution, in January 2023, of 200,000 square feet of buildable floor to area ratio (“FAR”) to the Company’s unconsolidated real estate venture, referred to in Note 4 below as the 3151 Market Street Venture, for use by this unconsolidated real estate venture in the development of 3151 Market Street. Upon contribution at fair market value, we recognized a gain, net of transaction costs, of $0.8 million in “Net gain on sale of undepreciated real estate” on the consolidated statements of operations.

Held-for-sale

As of June 30, 2023, the Company was under an agreement to sell to an unaffiliated third party an office property located in the Austin, Texas segment for $53.3 million and has classified the property as held for sale on the consolidated balance sheets. As of June 30, 2023, the carrying value of the of the property was in excess of the fair value less cost to sell. As a result, an impairment loss of $4.5 million was recognized. The estimated fair value is considered Level 3 in accordance with ASC 820 and was based upon the executed agreement of sale. Consummation of the sale is subject to closing conditions and there can be no assurance that the sale will be consummated on expected terms, or at all.

The following is a summary of the property classified as held for sale as of June 30, 2023 (in thousands):


	Held for Sale Properties (a)
	June 30, 2023
ASSETS HELD FOR SALE
Real estate investments:
Operating properties	$	54,701
Accumulated depreciation	(5,388)
Operating real estate investments, net	49,313
Construction-in-progress	370

Total real estate investments, net	49,683
Deferred costs, net	339
Intangible assets, net	1,755
Accrued Rent Receivable	790
Other assets	97
Total assets held for sale, net	$	52,664

LIABILITIES HELD FOR SALE
Mortgage notes payable, net
Deferred income, gains and rent	383
Intangible liabilities, net	658
Total liabilities held for sale, net	$	1,041