REAL ESTATE INVESTMENTS

9 Months Ended

Sep. 30, 2023

3. REAL ESTATE INVESTMENTS

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


	September 30, 2023		December 31, 2022
Land	$	414,179	$	403,998
Building and improvements	2,783,304		2,760,357
Tenant improvements	498,583		452,885


Total	$	3,696,066	$	3,617,240

Dispositions

During the three months ended March 31, 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, for use by this unconsolidated real estate venture in the development of 3151 Market Street, a life science project located in Philadelphia. 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.

During the three months ended September 30, 2023, the Company sold Three Barton Skyway, a 173,302 square foot office building located in Austin, TX for $53.3 million. As of June 30, 2023, the property was classified as held for sale and a $4.5 million impairment loss, inclusive of costs to sell, was recognized. There were no gains or additional losses recognized in connection with the sale during the three months ended September 30, 2023.

Impairment

For the quarter ended September 30, 2023, the Company recognized impairment losses totaling $11.7 million on properties located in the Pennsylvania Suburbs segment. The estimated fair value is considered Level 3 in accordance with ASC 820 and was based upon an executed purchase and sale agreement as of September 30, 2023. The Company is in active negotiations with the potential buyer and there can be no assurance that the Company will complete the disposition.