Real Estate Investments (Tables)

9 Months Ended

Sep. 30, 2017

Real Estate Properties [Line Items]

Gross Carrying Value Of Company's Properties

As of September 30, 2017 and December 31, 2016, the gross carrying value of the properties was as follows (in thousands):

	September 30,		December 31,
	2017		2016
Land	$	470,391	$	469,522
Building and improvements		2,846,869		2,683,087
Tenant improvements		451,807		433,686
Operating properties		3,769,067		3,586,295
Assets held for sale - real estate investments (a)		47,291		73,591
Total	$	3,816,358	$	3,659,886

(a) Real estate investments related to assets held for sale above represents gross real estate assets and does not include accumulated depreciation, land held for development or other assets on the balance sheet of the property held for sale. See “Held for Sale” below in this Note 3.

Schedule of Purchase Price Allocation

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

	July 18, 2017
Building, land and improvements	$	31,728
Intangible assets acquired (a)		2,838
Below market lease liabilities assumed (b)		(1,818	)
	$	32,748

(a) Weighted average amortization period of 5.9 years.

(b) Weighted average amortization period of 6.0 years.

Dispositions

The Company sold the following twelve office properties, one retail property and one mixed-use property during the nine-month period ended September 30, 2017 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Type	Number of Properties	Rentable Square Feet		Sales Price		Net Proceeds on Sale		Gain/(Loss) on Sale (a)
June 27, 2017	Two, Four A, Four B and Five Eves Drive (Evesham Corporate Center)	Marlton, NJ	Office	4		134,794	$	9,700	$	8,650	$	(325	)	(b)
June 12, 2017	7000 Midlantic Drive	Mount Laurel, NJ	Retail	1		10,784		8,200		7,714		1,413
March 30, 2017	200, 210 & 220 Lake Drive East (Woodland Falls)	Cherry Hill, NJ	Office	3		215,465		19,000		17,771		(249	)	(c)
March 15, 2017	Philadelphia Marine Center (Marine Piers)	Philadelphia, PA	Mixed-use	1		181,900		21,400		11,182		6,498		(d)
March 13, 2017	11700, 11710, 11720 & 11740 Beltsville Drive (Calverton)	Beltsville, MD	Office	3		313,810		9,000		8,354		-		(e)
February 2, 2017	1200 & 1220 Concord Avenue (Concord Airport Plaza)	Concord, CA	Office	2		350,256		33,100		32,010		551		(f)
Total Dispositions				14		1,207,009	$	100,400	$	85,681	$	7,888

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

(b) During the first quarter of 2017, the Company recognized a $1.0 million impairment related to these properties. The loss on sale represents closing costs.

(c) During the fourth quarter of 2016, the Company recognized a $7.3 million impairment related to these properties. The loss on sale represents closing costs.

(d) On March 15, 2017, the Company sold its sublease interest in the Piers at Penn’s Landing (the “Marine Piers”), which includes leasehold improvements containing 181,900 net rentable square feet, and a marina, located in Philadelphia, Pennsylvania for an aggregate sales price of $21.4 million, which will be paid in two installments. On the closing date, the buyer paid $12.0 million in cash. On the second purchase price installment date, the buyer will pay $9.4 million. The second purchase price installment is due on (a) January 31, 2020, in the event that the tenant at the Marine Piers does not exercise its existing option to extend the term of the sublease or (b) January 15, 2024, in the event that the tenant does exercise its current extension option to extend the term of the sublease. In accordance with ASC 360-20, Real Estate Sales, the Company determined that it is appropriate to account for the sales transaction under the cost recovery method. The Company received cash proceeds of $11.2 million, after closing costs and prorations, and the net book value of the Marine Piers was $4.7 million, resulting in a gain on sale of $6.5 million. The remaining gain on sale of $9.4 million will be recognized on the second purchase price installment date. The Marine Piers was classified as mixed-use within the Company’s property count.

(e) During the fourth quarter of 2016, the Company recognized a $3.0 million impairment related to these properties. During the first quarter of 2017, there was a price reduction of $1.7 million under the agreement of sale and an additional impairment of $1.7 million was recognized.

(f) During the fourth quarter of 2016, the Company recognized an $11.5 million impairment related to these properties. This sale is designated as a like-kind exchange under Section 1031 of the Internal Revenue Code (“IRC”) and, as such, the proceeds, totaling $32.0 million after closing costs and prorations, were deposited with a Qualified Intermediary, as defined under the IRC. The proceeds received at closing were recorded as “Other assets” in the Company’s consolidated balance sheet. During the third quarter of 2017, the Company acquired 3000 Market Street in Philadelphia, Pennsylvania using the full balance of the Section 1031 proceeds. See “Acquisition” section above.

The Company sold the following land parcels during the nine-month period ended September 30, 2017 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Parcels		Acres		Sales Price		Net Proceeds on Sale		Gain on Sale
September 13, 2017	50 E. Swedesford Square	Malvern, PA		1		12.0	$	7,200	$	7,098	$	882
July 18, 2017	Bishop's Gate	Mount Laurel, NJ		1		49.5		6,000		5,640		71	(a)
April 28, 2017	Garza Ranch - Multi-family	Austin, TX		1		8.4		11,800		11,560		-	(b)
February 15, 2017	Gateway Land - Site C	Richmond, VA		1		4.8		1,100		1,043		-	(c)
January 30, 2017	Garza Ranch - Hotel	Austin, TX		1		1.7		3,500		3,277		-	(b)
Total Dispositions				5		76.4	$	29,600	$	28,618	$	953

(a) During the fourth quarter of 2016, the Company recognized an impairment of $3.0 million. During the second quarter of 2017, the Company recognized an additional impairment of $0.3 million, representing closing costs. See “Land Impairment” section below.

(b) The Company has a continuing involvement through a completion guaranty, which requires the Company as developer to complete certain infrastructure improvements on behalf of the buyers of the land parcels. The cash received at settlement was recorded as “Deferred income, gains and rent” on the Company’s consolidated balance sheet and the Company will recognize the sale once the infrastructure improvements are complete. See Note 13, “Commitments and Contingencies” for further discussion of the infrastructure improvements.

(c) During the fourth quarter of 2016, the Company recognized a nominal impairment related to this land parcel.

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 not meet the criteria to be classified within discontinued operations at September 30, 2017 (in thousands):

	Held for Sale Properties Included in Continuing Operations
	September 30, 2017
	630 Allendale Road - Office (a)			Newtown Square - Office (b)			Total
ASSETS HELD FOR SALE
Real estate investments:
Operating properties	$	19,482		$	27,809		$	47,291
Accumulated depreciation		(6,985	)		(9,206	)		(16,191	)
Operating real estate investments, net		12,497			18,603			31,100
Construction-in-progress		-			25			25
Total assets held for sale, net	$	12,497		$	18,628		$	31,125
LIABILITIES HELD FOR SALE
Other liabilities	$	35		$	234		$	269
Total liabilities held for sale	$	35		$	234		$	269

(a) Office property containing 150,000 rentable square feet located in the Pennsylvania Suburbs segment.

(b) Five office properties containing 252,802 rentable square feet located in the Pennsylvania Suburbs segment.