Real Estate Investments (Tables)

12 Months Ended

Dec. 31, 2016

Real Estate Properties [Line Items]

Gross Carrying Value Of Company's Properties

As of December 31, 2016 and 2015 the gross carrying value of the Company’s Properties was as follows (in thousands):

	December 31,	December 31,
	2016	2015
Land	$                      469,522	$                      513,268
Building and improvements	2,683,087	2,719,780
Tenant improvements	433,686	459,952
Operating properties	3,586,295	3,693,000
Assets held for sale - real estate investments  (a)	73,591	794,588
Total	$                   3,659,886	$                   4,487,588

(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.

Dispositions

The Company sold the following properties during the twelve-month period ended December 31, 2016 (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 13, 2016	620, 640, 660 Allendale Road	King of Prussia, PA	3		156,669	$	12,800	$	12,014	$	2,382
September 1, 2016	1120 Executive Plaza	Mt. Laurel, NJ	1		95,183		9,500		9,241		(18	)	(b)
August 2, 2016	50 East Clementon Road	Gibbsboro, NJ	1		3,080		1,100		1,011		(85	)
May 11, 2016	196/198 Van Buren Street (Herndon Metro Plaza I&II)	Herndon, VA	2		197,225		44,500		43,412		(752	)	(c)
February 5, 2016	2970 Market Street  (Cira Square)	Philadelphia, PA	1		862,692		354,000		350,150		115,828
February 4, 2016	Och-Ziff Portfolio	Various (d)	58		3,924,783		398,100		353,971		(372	)	(e)
Total Dispositions			66		5,239,632	$	820,000	$	769,799	$	116,983

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

(b) As of June 30, 2016, the Company determined that the sale of the property was probable and classified this property as held for sale in accordance with applicable accounting standards for long lived assets. At such date, the carrying value of the property exceeded the fair value less the anticipated costs of sale. As a result, the Company recognized a provision for impairment totaling approximately $1.8 million during the three-month period ended June 30, 2016. The fair value measurement was based on the pricing in the purchase and sale agreement for the sale of the property. As the pricing in the purchase and sale agreement is unobservable, the Company determined that the inputs utilized to determine fair value for this property falls within Level 3 in accordance with the fair value hierarchy established by Accounting Standards Codification (ASC) Topic 820, "Fair Value Measurements and Disclosures.” The loss on sale represents additional closing costs recognized at closing.

(c) During the three-month period ended March 31, 2016, the Company recognized a provision for impairment totaling approximately $7.4 million on the properties. See “Held for Use Impairment” section below. The loss on sale primarily relates to additional closing costs recognized at closing.

(d) Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on February 10, 2016 contains a complete list of the 58 properties disposed of in the transactions with Och-Ziff Capital Management Group LLC. See Note 4, "Investment in Unconsolidated Real Estate Ventures," for further details of the transactions.

(e) During the three-month period ended December 31, 2015, the Company recognized a provision for impairment totaling approximately $45.4 million. The loss on sale represents additional closing costs recognized at closing.

The Company sold the following land parcels during the twelve-month period ended December 31, 2016 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Parcels		Acres		Sales Price		Net Proceeds on Sale		Gain on Sale (a)
December 2, 2016	Oakland Lot B	Oakland, CA		1		0.9	$	13,750	$	13,411	$	9,039
August 19, 2016	Highlands Land	Mt. Laurel, NJ		1		2.0		288		284		193
January 15, 2016	Greenhills Land	Reading, PA		1		120.0		900		837		-	(b)
Total Dispositions				3		122.9	$	14,938	$	14,532	$	9,232

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

(b) The carrying value of the land exceeded the fair value less the anticipated costs of sale as of December 31, 2015, therefore the Company recognized an impairment loss of $0.3 million during the three-month period ended December 31, 2015. There was no gain or loss recognized on the sale during 2016.

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	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 Properties)	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 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.

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

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	)

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 at December 31, 2016 but which did not meet the criteria to be classified within discontinued operations at December 31, 2016 (in thousands):  

	Held for Sale Properties Included in Continuing Operations
	December 31, 2016
	Metropolitan D.C. - Office (a)			Other Segment - Office (b)			Other Segment - Land (c)		Total
ASSETS HELD FOR SALE
Real estate investments:
Operating properties	$	21,720		$	51,871		$	-	$	73,591
Accumulated depreciation		(11,935	)		(20,981	)		-		(32,916	)
Operating real estate investments, net		9,785			30,890			-		40,675
Land held for development		-			-			1,043		1,043
Total real estate investments, net		9,785			30,890			1,043		41,718
Total assets held for sale, net	$	9,785		$	30,890		$	1,043	$	41,718
LIABILITIES HELD FOR SALE
Other liabilities	$	73		$	8		$	-	$	81
Total liabilities held for sale	$	73		$	8		$	-	$	81

(a) As of December 31, 2016, the Company determined that the sale of three office properties in the Metropolitan D.C. segment 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 their fair value less the anticipated costs of sale. As a result, the Company recognized an impairment loss totaling approximately $3.0 million during the three-month period ended December 31, 2016. The Company measured this impairment based on a discounted cash flow analysis, using a hold period of 10 years and residual capitalization rates and discount rates of 9.00% and 10.00%, respectively. The results were comparable to indicative pricing in the market. As significant inputs to the model are unobservable, the Company determined that the value determined for this property falls within Level 3 fair value reporting.

(b) As of December 31, 2016, the Company determined that the sale of two office properties in the Other segment 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 $11.5 million during the three-month period ended December 31, 2016. The Company measured this impairment based on a discounted cash flow analysis, using a hold period of 10 years and residual capitalization rates and discount rates of 9.75% and 9.75%, respectively. The results were comparable to indicative pricing in the market. As significant inputs to the model are unobservable, the Company determined that the value determined for this property falls within Level 3 fair value reporting.

(c) As of December 31, 2016, the Company determined that the sale of a land parcel in the Other segment was probable and classified the land parcel as held for sale in accordance with applicable accounting standards for long lived assets. At such date, the carrying value of the land approximated the fair value less the anticipated costs of sale and the Company recorded a nominal impairment. The fair value measurement was based on the pricing in the purchase and sale.

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		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 its 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.