Real Estate Investments (Tables)

12 Months Ended

Dec. 31, 2015

Real Estate Properties [Line Items]

Gross Carrying Value Of Company's Properties

As of December 31, 2015 and 2014 the gross carrying value of the Company’s Properties was as follows (in thousands):

	2015		2014
Land	$	513,268	$	669,635
Building and improvements		2,719,780		3,409,303
Tenant improvements		459,952		524,754
		3,693,000		4,603,692
Assets held for sale - real estate investments (a)		794,588		27,436
Total	$	4,487,588	$	4,631,128

(a) Real estate investments related to assets held for sale above represents gross real estate assets and does not include accumulated depreciation or other assets on the balance sheets of the properties held for sale. See Held for Sale section below.

Schedule of Purchase Price Allocation

The purchase price has been allocated as follows (in thousands):

	June 22, 2015
Building, land and improvements	$	163,271
Land inventory		6,045
Intangible assets acquired (a)		50,637
Below market lease liabilities assumed (b)		(8,600	)
	$	211,353
Return of existing equity method investment		(66,324	)
Gain on remeasurement		(758	)
Net working capital assumed		(450	)
Total cash payment at settlement	$	143,821

(a) Weighted average amortization period of 4.0 years.

(b) Weighted average amortization period of 1.5 years

The purchase price is allocated as follows:

	December 19, 2013
Building, land and improvements	$	255,705
Intangible assets acquired		85,036
Below market lease liabilities assumed		(8,637	)
	$	332,104
Mortgage debt assumed - at fair value (a)		(238,082	)
Return of existing equity method investment		(30,424	)
Net working capital assumed		10,423
Non-controlling interest		(946	)
Total cash payment at settlement	$	73,075

(a) Principal outstanding on assumed mortgage debt at December 19, 2013 was $237.1 million.

Schedule of Pro Forma Information

The supplemental pro forma operating data is not necessarily indicative of what the actual results of operations would have been assuming the transaction had been completed as set forth above, nor do they purport to represent the Company’s results of operations for future periods (in thousands, except for per share amounts).

	December 31,
	2015			2014
Pro forma revenue	$	612,649		$	618,119
Pro forma income (loss) from continuing operations		(36,704	)		(7,371	)
Pro forma net income (loss) available to common shareholders		(43,594	)		(13,669	)
Earnings (loss) per common share from continuing operations:
Basic -- as reported	$	(0.17	)	$	0.04
Basic -- as pro forma	$	(0.21	)	$	(0.04	)
Diluted -- as reported	$	(0.17	)	$	0.04
Diluted -- as pro forma	$	(0.21	)	$	(0.04	)
Earnings (loss) per common share:
Basic -- as reported	$	(0.21	)	$	-
Basic -- as pro forma	$	(0.24	)	$	(0.08	)
Diluted -- as reported	$	(0.21	)	$	-
Diluted -- as pro forma	$	(0.24	)	$	(0.08	)

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination

Intangible assets acquired and intangible liabilities assumed consist of the following (in thousands):

	December 19, 2013			Weighted Average Amortization Period (in years)
Intangible assets:
In-place lease value	$	80,916		7.9
Above market tenant leases acquired		4,120		6.9
Total	$	85,036
Intangible liabilities:
Below market leases acquired	$	(8,637	)	6.5

Held for Sale Properties Included in Continuing Operations [Member]

Real Estate Properties [Line Items]

Summary of Properties Classified as Held for Sale but Which did not Meet the Criteria to be Classified within Discontinued Operations

The following is a summary of properties classified as held for sale but which did it not meet the criteria to be classified within discontinued operations at December 31, 2015 (in thousands):  

	Held for Sale Properties Included in Continuing Operations
	December 31, 2015
	Och-Ziff Properties (a)			2970 Market Street (b)			Greenhills Land (c)		Total
ASSETS HELD FOR SALE
Real estate investments:
Operating properties	$	526,099		$	268,489		$	-	$	794,588
Accumulated depreciation		(179,092	)		(34,489	)		-		(213,581	)
Operating real estate investments, net		347,007			234,000			-		581,007
Construction-in-progress		1,915			25			-		1,940
Land held for development		-			-			837		837
Total real estate investments, net		348,922			234,025			837		583,784
Intangible assets, net		581			-			-		581
Total assets held for sale, net	$	349,503		$	234,025		$	837	$	584,365
LIABILITIES HELD FOR SALE
Acquired lease intangibles, net	$	192		$	-		$	-	$	192
Other liabilities		1,959			-			-		1,959
Total liabilities held for sale	$	2,151		$	-		$	-	$	2,151

(a) On February 4, 2016, the Company disposed of its interests in 58 properties located in the Pennsylvania Suburbs, New Jersey/Delaware, Metropolitan Washington, D.C. and Richmond, Virginia segments in a series of related transactions with Och Ziff Real Estate. During the fourth quarter of 2015, significant provisions were agreed upon by both the Company and Och Ziff Real Estate and, as a result, the Company determined that the sale of the portfolio was probable and classified these properties as held for sale in accordance with applicable accounting standards for long lived assets. At such date, the carrying value of the properties exceeded the fair value less the anticipated costs of sale. As a result, the Company recognized an impairment loss totaling approximately $45.4 million during the year ended December 31, 2015. The fair value measurement was based on the pricing in the purchase and sale agreement.  As the significant inputs to the model are unobservable, the Company determined that the value determined for these real estate investments fall within Level 3 for fair value reporting.

(b) On December 23, 2015 the Company entered into a purchase and sale agreement to dispose of its equity interests in the office property located at 2970 Market Street in Philadelphia commonly known as 30^th Street Main Post Office (“Cira Square”), which includes 862,692 square feet of rentable space and is fully leased to a single tenant.  As of December 31, 2015, the Company determined the sale was probable and classified the property as held for sale in accordance with applicable accounting standards for long lived assets. As the fair value less anticipated costs to sell exceeded the carrying value of the property no impairment loss was recorded.  The fair value measurement was based on the pricing in the purchase and sale agreement.  As the sales price is unobservable, the Company determined that the significant inputs used to value this real estate investment falls within Level 3 for fair value reporting. On February 5, 2016 the Company completed the disposition of our equity interests in Cira Square.

(c) On January 15, 2016, the Company sold the fee interest in a 120 acre land parcel located in Berks County, Pennsylvania for $0.9 million. As of December 31, 2015, the Company classified this land parcel as held for sale in accordance with the applicable accounting standards for long lived assets. At such date, the carrying value of the properties exceeded the fair value less the anticipated costs of sale.  As a result, the Company recognized an impairment loss totaling approximately $0.3 million during the year ended December 31, 2015.

Office Properties [Member]

Real Estate Properties [Line Items]

Dispositions

The Company sold the following office properties, in each case to unaffiliated third parties in arms’ length transactions, during the twelve-month period ended December 31, 2015 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Properties	Rentable Square Feet		Sales Price		Net Proceeds on Sale		Gain On Sale (a)
December 31, 2015	5707 Southwest Parkway (Encino Trace)	Austin, TX	2		320,000	$	76,700	$	50,158	$	2,008	(b)
December 29, 2015	Laurel Corporate Center	Mt. Laurel, NJ	6		560,147		56,500		56,253		2,901
December 18, 2015	Carlsbad Properties	Carlsbad, CA	3		196,075		30,400		29,568		-	(c)
December 18, 2015	751-761 Fifth Ave	King of Prussia, PA	1		158,000		4,600		4,245		894
September 29, 2015	1000 Howard Boulevard	Mt. Laurel, NJ	1		105,312		16,500		15,780		4,828
August 13, 2015	Bay Colony Office Park	Wayne, PA	4		247,294		37,500		36,386		269
August 11, 2015	741 First Avenue	King of Prussia, PA	1		77,184		4,900		4,640		372
June 10, 2015	100 Gateway Centre Parkway	Richmond, VA	1		74,991		4,100		3,911		-	(d)
April 24, 2015	Christina & Delaware Corporate Centers	Newark, DE / Wilmington, DE	5		485,182		50,100		49,579		1,749
April 9, 2015	Lake Merritt Tower	Oakland, CA	1		204,336		65,000		62,800		-	(e)
January 8, 2015	1000 Atrium Way / 457 Haddonfield Road (Atrium I / Libertyview)	Mt. Laurel, NJ / Cherry Hill, NJ	2		221,405		28,300		26,778		8,981
Total Dispositions			27		2,649,926	$	374,600	$	340,098	$	22,002	(f)

(a) Gain on Sale is net of closing and other transaction related costs.

(b) On December 31, 2015, the Company contributed two newly constructed four-story, Class A office buildings, commonly known as “Encino Trace,” containing an aggregate of approximately 320,000 square feet in Austin, Texas to one of its existing real estate ventures (the “Austin Venture”) that the Company formed in 2013 with G&I VII Austin Office LLC, an investment vehicle advised by DRA Advisors LLC (“DRA”). When these two properties were contributed to the Austin Venture the Company had incurred a total of $76.7 million of development costs, representing the contribution value.  The project is expected to cost $91.3 million with remaining costs fully funded by the Austin Venture.  In conjunction with the contribution: (i) the Austin Venture obtained a $30.0 million mortgage loan; (ii) DRA contributed $25.1 million in net cash to the capital of the Austin Venture, including a $1.8 million working capital contribution; and (iii) the Austin Venture distributed $50.2 million to the Company and credited the Company with a $23.3 million capital contribution to the Austin Venture. In addition to the contribution of the properties, the Company also made a $1.8 million cash contribution to the Austin Venture for working capital. The Company recognized a $2.0 million gain on the contribution. Under the Encino Trace loan agreement the Austin Venture has the option, subject to certain leasing and loan-to-value requirements, to borrow an additional $29.7 million to fund tenant improvements and leasing commissions.

(c) The Company recorded an impairment loss of $6.3 million for the Carlsbad office properties during the fourth quarter of 2015. As such, there was no gain at disposition for this property.

(d) The Company recorded an impairment loss of $0.8 million for 100 Gateway Centre Parkway during the second quarter of 2015. As such, there was no gain at disposition for this property.

(e) The Company recorded an impairment loss of $1.7 million for Lake Merritt Tower at March 31, 2015. As such, there was no gain at disposition for this property. Sales proceeds were deposited in escrow under Section 1031 of the Internal Revenue Code and applied to purchase the Broadmoor Austin portfolio. Refer to Broadmoor Austin Associates acquisition summary, above, for further details.

(f) Total gain on sale does not include a deferred gain of $0.5 million related to a prior sale.

The Company sold the following land parcels, in each case to unaffiliated third parties in arms’ length transactions, during the twelve-month period ended December 31, 2015 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Parcels		Acres		Sales Price		Net Proceeds on Sale		Gain/(Loss) on Sale (a)
December 18, 2015	Two Christina Centre	Wilmington, DE	1		1.6		$	6,500	$	5,986	$	-		(b)
September 1, 2015	7000 Midlantic	Mt. Laurel, NJ		1		3.5		2,200		1,742		(169	)
August 31, 2015	Four Points	Austin, TX		1		8.6		2,500		2,344		71
August 25, 2015	Two Kaiser Plaza	Oakland, CA		1		1.0		11,100		11,016		3,117
Total Dispositions			4		14.7		$	22,300	$	21,088	$	3,019

(a) Gain/(Loss) on sale includes closing and other transaction related costs.

(b) The Company recorded an impairment loss of $0.3 million for Two Christina Centre during the fourth quarter of 2015. As such, there was no gain/(loss) at disposition for this land parcel.

The Company sold the following office properties, in each case to unaffiliated third parties in arms’ length transactions, during the twelve-month period ended December 31, 2014 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Properties	Rentable Square Feet		Sales Price		Net Proceeds on Sale		Gain/(Loss) On Sale (a)
October 24, 2014	100, 101, 200, 300 and 301 Lindenwood Drive (the Valleybrooke Poperties)	Malvern, PA	5		279,934	$	37,900	$	37,156	$	203		(b)
September 30, 2014	1880 Campus Commons Drive (Campus Pointe)	Reston, VA	1		172,943		42,500		41,476		4,698
April 3, 2014	11305 Four Points Drive (Four Points Centre) (c)	Austin, TX	2		192,396		20,750		34,392		(255	)	(c)
Total Dispositions			8		645,273	$	101,150	$	113,024	$	4,646

(a) Gain/(Loss) on Sale is net of closing and other transaction related costs.

(b) During the third quarter of 2014, the Company recorded a $1.8 million impairment loss on these properties.  

(c) On April 3, 2014, the Company contributed two three-story, Class A office buildings, commonly known as “Four Points Centre,” containing an aggregate of approximately 192,396 net rentable square feet in Austin, Texas to an existing real estate venture (the “Austin Venture”) that the Company formed in 2013 with G&I VII Austin Office LLC, an investment vehicle advised by DRA Advisors LLC (“DRA”). The Company contributed the properties to the Austin Venture at an agreed upon value of $41.5 million. In conjunction with the contribution: (i) the Austin Venture obtained a $29.0 million mortgage loan; (ii) DRA contributed $5.9 million in net cash to the capital of the Austin Venture; and (iii) the Austin Venture distributed $34.4 million to the Company and credited the Company with a $5.9 million capital contribution to the Austin Venture. The Company incurred a $0.2 million loss on the contribution, driven primarily by closing costs.

The Company sold the following land parcels, in each case to unaffiliated third parties in arms’ length negotiations, during the twelve-month period ended December 31, 2014 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Parcels		Acres		Sales Price		Net Proceeds on Sale		Gain/(Loss) on Sale (a)
April 16, 2014	Westpoint II Land	Dallas, TX	1		5.3		$	1,600	$	1,505	$	12
March 27, 2014	Rob Roy Land	Austin, TX		1		16.8		3,520		3,350		1,172
Total Dispositions			2		22.1		$	5,120	$	4,855	$	1,184

(a) Gain/(Loss) on Sale is net of closing and other transaction related costs.

The Company sold the following office properties during the twelve-month period ended December 31, 2013 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Properties	Rentable Square Feet		Sales Price		Net Proceeds on Sale		Gain/(Loss) On Sale (a)
December 19, 2013	875 First Avenue	King of Prussia, PA	1		50,000	$	3,750	$	3,658	$	131
October 17, 2013	1336 Enterprise Drive	West Chester, PA	1		39,330		2,600		2,521		156
October 16, 2013	Austin Properties/DRA JV	Austin, TX	7		1,398,826		330,000		266,340		25,864		(b)
June 28, 2013	16870 West Bernardo Drive	San Diego, CA	1		68,708		18,000		17,403		(856	)
June 28, 2013	100 Arrandale Boulevard	Exton, PA	1		34,931		3,500		3,268		(401	)
June 19, 2013	1700 Paoli Pike (100 Applebrook)	Malvern, PA	1		28,000		2,675		2,544		(444	)
June 14, 2013	Pacific View Plaza	Carlsbad, CA	1		51,695		10,300		9,950		(521	)
February 25, 2013	Princeton Pike Corporate Center	Lawrenceville, NJ	8		800,546		121,000		112,863		5,304
Total Dispositions			21		2,472,036	$	491,825	$	418,547	$	29,233

(a) Gain/(Loss) on Sale is net of closing and other transaction related costs.

(b) The Austin portfolio was contributed to a newly formed real estate venture.  For additional information, see Note 4, “Investments in Unconsolidated Ventures,” to our consolidated financial statements.