Real Estate Investments (Tables)

9 Months Ended

Sep. 30, 2018

Real Estate Properties [Line Items]

Gross Carrying Value Of Operating Properties

As of September 30, 2018 and December 31, 2017, the gross carrying value of the operating properties was as follows (in thousands):

	September 30,		December 31,
	2018		2017
Land	$	437,640	$	492,197
Building and improvements		2,579,740		2,896,113
Tenant improvements		411,668		444,038
Operating properties		3,429,048		3,832,348
Assets held for sale - real estate investments		396,072		-
Total	$	3,825,120	$	3,832,348

Schedule of Purchase Price Allocation

The acquisition value has been allocated as follows (in thousands):

	January 5, 2018
Building, land and improvements	$	20,734
Intangible assets acquired (a)		3,144
Below market lease liabilities assumed (b)		(182	)
Total unencumbered acquisition value	$	23,696
Mortgage debt assumed - at fair value (c)		(9,940	)
Total encumbered acquisition value	$	13,756
Total unencumbered acquisition value		23,696
Mortgage debt assumed - at fair value (c)		(9,940	)
Investment in unconsolidated real estate ventures		(3,502	)
Net working capital assumed		1,379
Gain on real estate venture transactions	$	11,633

(a)Weighted average amortization period of 4.1 years.

(b)Weighted average amortization period of 4.8 years.

(c)The outstanding principal balance on mortgage debt assumed at January 5, 2018 was $9.7 million.

Summary of Gain on Sale for Each Land Parcel

The Company sold the following office property during the nine-month period ended September 30, 2018 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Type	Number of Properties	Rentable Square Feet		Sales Price		Net Proceeds on Sale		Loss on Sale
June 21, 2018	20 East Clementon Road	Gibbsboro, NJ	Office	1		38,260	$	2,000	$	1,850	$	(35	)
Total Dispositions				1		38,260	$	2,000	$	1,850	$	(35	)

The Company sold the following land parcels during the nine-month period ended September 30, 2018 (dollars in thousands):

Disposition Date	Property/Portfolio Name	Location	Number of Parcels		Acres		Sales Price		Net Proceeds on Sale		Gain on Sale
March 16, 2018	Garza Ranch - Office	Austin, TX		1		6.6	$	14,571	$	14,509	$	1,424	(a)
January 10, 2018	Westpark Land	Durham, NC		1		13.1		485		412		22
Total Dispositions				2		19.7	$	15,056	$	14,921	$	1,446

(a) As of March 31, 2018, the Company had not transferred control to the buyer of this land parcel, or two other parcels at this site which were sold during 2017, because of a completion guarantee which required 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 sheets. During the three months ended June 30, 2018, the infrastructure improvements were substantially completed, at which time the Company transferred control of the land parcels. As a result, the Company then recognized the sale. See Note 2, “Basis of Presentation,” for further discussion of the infrastructure improvements and related revenue recognition.

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, 2018 (in thousands):

	Held for Sale Properties Included in Continuing Operations
	September 30, 2018
	Metropolitan Washington, D.C. - Office (a)			Pennsylvania Suburbs - Land (b)		Other - Land (b)		Total
ASSETS HELD FOR SALE
Real estate investments:
Operating properties	$	396,072		$	-	$	-	$	396,072
Accumulated depreciation		(112,600	)		-		-		(112,600	)
Operating real estate investments, net		283,472			-		-		283,472
Construction-in-progress		1,748			-		-		1,748
Land inventory		-			4,254		7,321		11,575
Total real estate investments		285,220			4,254		7,321		296,795
Other assets		399			-		-		399
Total assets held for sale, net	$	285,619		$	4,254	$	7,321	$	297,194
LIABILITIES HELD FOR SALE
Other liabilities	$	826		$	-	$	-	$	826
Total liabilities held for sale	$	826		$	-	$	-	$	826

(a) As of September 30, 2018, the Company determined that the sale of eight office properties, containing 1,293,197 rentable square feet, in the Metropolitan Washington, 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 $366.0 million carrying value of the properties exceeded the estimated $309.1 million fair value less the anticipated costs of sale. As a result, the Company recognized an impairment loss totaling approximately $56.9 million during the three-month period ended September 30, 2018. The Company measured this impairment based on a discounted cash flow analysis, using a hold period of ten years and residual capitalization rates and discount rates of 7.47% and 8.60%, 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 September 30, 2018, the Company determined that the sale of one land parcel in the Pennsylvania Suburbs segment and two parcels of land 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 fair value less the anticipated costs of sale of the properties exceeded the carrying values. As a result, the Company expects to record gains on sale. The fair value measurement will be based on the pricing in the purchase and sale agreements.