Investments in Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2010

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

Listed below are the unconsolidated joint ventures in which the Company has a noncontrolling interest. The Company receives fees from these joint ventures for services it provides. These services include property management, leasing, development and administration. These fees are included in interest and other income in the accompanying consolidated statements of operations. The Company may also receive a promoted interest if certain return thresholds are met.

Liberty Venture I, LP

The Company has a 25% interest in Liberty Venture I, LP, an entity engaged in the ownership of industrial properties in New Jersey. This joint venture is part of the Company’s Northeast reportable segment.

As of December 31, 2010, the joint venture owned 24 industrial properties totaling 3.3 million square feet and 43 acres of developable land.

The Company recognized $611,000, $682,000 and $765,000 in fees for services during the years ended December 31, 2010, 2009 and 2008, respectively.

Kings Hill Unit Trust

The Company has a 20% interest in Kings Hill Unit Trust, an entity engaged in the ownership of office and industrial properties in the County of Kent, United Kingdom. This joint venture is part of the Company’s United Kingdom reportable segment.

As of December 31, 2010, the joint venture owned 10 office properties and five industrial properties totaling 535,000 square feet.

The Company had a note receivable from Kings Hill Unit Trust for $4.3 million and $4.5 million as of December 31, 2010 and 2009, respectively. The note receivable bears interest at a 9% rate and is due in January 2016. This related party receivable is reflected in investments in and advances to unconsolidated joint ventures in the Company’s consolidated balance sheets.

The Company had a receivable from Kings Hill Unit Trust for $147,000 and $270,000 as of December 31, 2010 and 2009, respectively. This related party receivable is reflected in accounts receivable in the Company’s consolidated balance sheets.

Income from fees and interest was $465,000, $492,000 and $603,000 during the years ended December 31, 2010, 2009 and 2008, respectively.

Liberty Illinois, LP

The Company has a 25% interest in Liberty Illinois, LP, an entity primarily engaged in the ownership of industrial properties in Illinois. This joint venture is part of the Company’s Central reportable segment.

As of December 31, 2010, the joint venture owned 15 industrial properties totaling 5.1 million square feet and 342 acres of developable land.

The Company recognized $596,000, $890,000 and $1.2 million in fees for services during the years ended December 31, 2010, 2009 and 2008, respectively.

Blythe Valley JV Sarl

The Company has a 20% interest in Blythe Valley JV Sarl, an entity engaged in the ownership of office properties in the West Midlands, United Kingdom. This joint venture is part of the Company’s United Kingdom reportable segment.

As of December 31, 2010, the joint venture owned 13 office properties totaling 480,000 square feet and 98 acres of developable land.

The Company had a note receivable from Blythe Valley JV Sarl for $8.5 million and $6.9 million as of December 31, 2010 and 2009, respectively. The note receivable bears interest at a 10% rate and is due in December 2017. This related party receivable is reflected in investments in and advances to unconsolidated joint ventures in the Company’s consolidated balance sheets.

The Company had a receivable from Blythe Valley JV Sarl for $101,000 and $116,000 as of December 31, 2010 and 2009, respectively. This related party receivable is reflected accounts receivable in the Company’s consolidated balance sheets.

The Company recognized $316,000, $376,000 and $449,000 in fees for services during the years ended December 31, 2010, 2009 and 2008, respectively.

Liberty Washington, LP

The Company has a 25% interest in Liberty Washington, LP, an entity engaged in the ownership of office properties in Northern Virginia and Washington, D.C. This joint venture is part of the Company’s Metro reportable segment. As of December 31, 2010, the joint venture owned 25 office properties totaling 2.6 million square feet and six acres of developable land.

The Company had a payable to Liberty Washington, LP for $236,000 and $900,000 as of December 31, 2010 and 2009, respectively. This related party payable is reflected in investments in and advances to unconsolidated joint ventures in the Company’s consolidated balance sheets.

The Company had a receivable from Liberty Washington, LP for $2.0 million as of December 31, 2010. This related party receivable is reflected as a reduction of other liabilities in the Company’s consolidated balance sheet.

The Company recognized $4.0 million, $4.1 million and $5.6 million in interest and fees for services during the year ended December 31, 2010, 2009 and 2008, respectively.

Liberty/Commerz 1701 JFK Boulevard, LP

On April 13, 2006, the Company entered into a joint venture pursuant to which it sold an 80% interest in the equity of Comcast Center, a 1.25 million square foot office tower the Company was then developing in Philadelphia, Pennsylvania. The transaction valued the property at $512 million. Upon signing the joint venture agreement and through March 30, 2008, the criteria for sale recognition had not been met and the transaction was accounted for as a financing arrangement. This joint venture is part of the Company’s Metro reportable segment.

On March 31, 2008, a $324 million, ten-year secured permanent financing at a rate of 6.15% for Comcast Center was funded. The proceeds from this financing were used to pay down outstanding borrowings on the Company’s credit facility.

On March 31, 2008, all conditions for sale treatment were satisfied and the Company recognized the sale of Comcast Center to an unconsolidated joint venture. Profit on the transaction was deferred until the costs of the project could be reasonably estimated. Profit on the sale of $6.6 million was recognized in the fourth quarter of 2008.

The Company had a receivable from this joint venture for $2.6 million and $2.4 million as of December 31, 2010 and 2009, respectively. This related party receivable is due to the funding of joint venture development costs and is reflected in investments in and advances to unconsolidated joint ventures in the Company’s consolidated balance sheet.

The Company had a receivable from this joint venture for $420,000 and $252,000 as of December 31, 2010 and 2009, respectively. This related party receivable is reflected in accounts receivable in the Company’s consolidated balance sheets.

The Company recognized $2.0 million, $1.9 million and $883,000 in fees for services during the years ended December 31, 2010, 2009, and 2008 respectively.

Other Joint Ventures

As of December 31, 2010, the Company had a 50% ownership interest in three additional unconsolidated joint ventures. One of these joint ventures has four operating properties and an investment in land held for development and is part of the Company’s South reportable segment. One of these joint ventures has one operating property, an investment in land held for development and a leasehold interest and is part of the Company’s United Kingdom reportable segment. The other joint venture has a leasehold interest and does not operate or own operating properties and is part of the Company’s United Kingdom reportable segment. As of December 31, 2010, the Company had a $3.1 million note payable due to this joint venture. The note payable is interest free and is due upon written notice from the joint venture.

The Company’s share of each of the joint venture’s earnings is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of operations.

The condensed balance sheets as of December 31, 2010 and 2009 and statements of operations for Liberty Venture I, LP, Kings Hill Unit Trust, Liberty Illinois, LP, Blythe Valley JV Sarl, Liberty Washington, LP, Liberty Commerz 1701 JFK Boulevard, LP and other unconsolidated joint ventures for the years ended December 31, 2010, 2009 and 2008 are as follows (in thousands):

Condensed Balance Sheets:


	December 31, 2010
	Liberty									Blythe						Liberty Commerz
	Venture I,			Kings Hill			Liberty			Valley JV			Liberty			1701 JFK
	LP			Unit Trust			Illinois, LP			Sarl			Washington, LP			Boulevard, LP			Other			Total

Real estate assets	$	133,443		$	183,763		$	252,140		$	202,544		$	909,485		$	493,196		$	68,614		$	2,243,185
Accumulated depreciation		(23,764	)		(15,861	)		(24,436	)		(14,887	)		(71,513	)		(41,733	)		(3,786	)		(195,980	)

Real estate assets, net		109,679			167,902			227,704			187,657			837,972			451,463			64,828			2,047,205

Land held for development		2,741			—			42,698			36,897			2,000			—			21,848			106,184
Other assets		11,475			6,480			13,514			12,221			55,138			49,457			28,959			177,244

Total assets	$	123,895		$	174,382		$	283,916		$	236,775		$	895,110		$	500,920		$	115,635		$	2,330,633


Debt	$	75,801		$	140,859		$	140,400		$	192,132		$	347,990		$	324,000		$	53,996		$	1,275,178
Other liabilities		2,686			41,058			5,897			67,060			34,161			10,775			10,927			172,564
Equity		45,408			(7,535	)		137,619			(22,417	)		512,959			166,145			50,712			882,891

Total liabilities and equity	$	123,895		$	174,382		$	283,916		$	236,775		$	895,110		$	500,920		$	115,635		$	2,330,633

Company’s net investment in unconsolidated joint ventures (1)	$	10,600		$	3,286		$	21,959		$	2,298		$	74,345		$	34,355		$	25,073		$	171,916


	December 31, 2009
																Liberty
										Blythe			Liberty			Commerz 1701
	Liberty			Kings Hill			Liberty			Valley JV			Washington,			JFK Boulevard,
	Venture I, LP			Unit Trust			Illinois, LP			Sarl			LP			LP			Other			Total

Real estate assets	$	132,016		$	190,110		$	229,149		$	209,869		$	777,491		$	493,119		$	72,954		$	2,104,708
Accumulated depreciation		(19,689	)		(13,081	)		(18,409	)		(10,651	)		(50,090	)		(27,880	)		(2,204	)		(142,004	)

Real estate assets, net		112,327			177,029			210,740			199,218			727,401			465,239			70,750			1,962,704

Development in progress		—			—			21,800			—			111,830			—			—			133,630
Land held for development		2,735			—			42,723			48,013			2,000			—			22,083			117,554
Other assets		11,755			9,855			11,993			12,667			52,722			46,821			34,698			180,511

Total assets	$	126,817		$	186,884		$	287,256		$	259,898		$	893,953		$	512,060		$	127,531		$	2,394,399


Debt	$	76,765		$	153,549		$	151,270		$	199,370		$	347,046		$	324,000		$	54,935		$	1,306,935
Other liabilities		2,104			41,826			6,786			51,262			31,706			10,478			17,149			161,311
Equity		47,948			(8,491	)		129,200			9,266			515,201			177,582			55,447			926,153

Total liabilities and equity	$	126,817		$	186,884		$	287,256		$	259,898		$	893,953		$	512,060		$	127,531		$	2,394,399

Company’s net investment in unconsolidated joint ventures (1)	$	11,238		$	3,198		$	19,567		$	3,383		$	73,369		$	36,461		$	28,368		$	175,584


(1)		Differences between the Company’s net investment in unconsolidated joint ventures and its underlying equity in the net assets of the venture is primarily a result of impairments related to the Company’s investment in unconsolidated joint ventures, the deferral of gains associated with the sales of properties to joint ventures in which the Company retains an ownership interest and loans made to the joint ventures by the Company. Differences between historical cost basis and the basis reflected at the joint venture level (other than loans) are typically depreciated over the life of the related asset.

Condensed Statements of Operations:


	Year Ended December 31, 2010
																Liberty
	Liberty									Blythe			Liberty			Commerz 1701
	Venture I,			Kings Hill			Liberty			Valley JV			Washington,			JFK Boulevard,
	LP			Unit Trust			Illinois, LP			Sarl			LP			LP			Other			Total

Total revenue	$	17,089		$	15,980		$	20,160		$	13,270		$	72,824		$	61,444		$	7,276		$	208,043
Operating expense		7,352			2,471			7,782			3,401			25,614			21,417			1,271			69,308

		9,737			13,509			12,378			9,869			47,210			40,027			6,005			138,735

Interest		(5,879	)		(3,078	)		(7,966	)		(14,783	)		(20,486	)		(20,445	)		(3,485	)		(76,122	)
Depreciation and amortization		(5,099	)		(4,197	)		(7,051	)		(5,315	)		(29,132	)		(15,479	)		(1,979	)		(68,252	)
Other income/(expense)		11			(564	)		(48	)		(289	)		165			(781	)		20			(1,486	)

Net (loss) income	$	(1,230	)	$	5,670		$	(2,687	)	$	(10,518	)	$	(2,243	)	$	3,322		$	561		$	(7,125	)

Company’s equity in (loss) earnings of unconsolidated joint ventures	$	(107	)	$	1,317		$	(174	)	$	(1,980	)	$	1,624		$	1,157		$	459		$	2,296


	Year Ended December 31, 2009
																Liberty
	Liberty									Blythe			Liberty			Commerz 1701
	Venture I,			Kings Hill			Liberty			Valley JV			Washington,			JFK Boulevard,
	LP			Unit Trust			Illinois, LP			Sarl			LP			LP			Other			Total

Total revenue	$	18,407		$	16,197		$	22,191		$	13,325		$	74,850		$	61,094		$	4,928		$	210,992
Operating expense		6,559			2,649			8,350			6,120			26,159			21,170			2,435			73,442

		11,848			13,548			13,841			7,205			48,691			39,924			2,493			137,550

Interest		(4,992	)		(7,674	)		(7,469	)		(13,084	)		(17,086	)		(20,455	)		(2,915	)		(73,675	)
Depreciation and amortization		(4,255	)		(4,559	)		(7,117	)		(5,576	)		(30,727	)		(15,498	)		(1,594	)		(69,326	)
Other income/(expense)		131			(602	)		(50	)		(175	)		280			(378	)		156			(638	)
Impairment charges		—			—			—			—			(39,380	)		—			—			(39,380	)

Net income (loss)	$	2,732		$	713		$	(795	)	$	(11,630	)	$	(38,222	)	$	3,593		$	(1,860	)	$	(45,469	)

Company’s equity in earnings (loss) of unconsolidated joint ventures	$	905		$	334		$	181		$	(1,318	)	$	1,649		$	1,241		$	(831	)	$	2,161


	Year Ended December 31, 2008
																Liberty
	Liberty									Blythe			Liberty			Commerz 1701
	Venture I,			Kings Hill			Liberty			Valley JV			Washington,			JFK Boulevard,
	LP			Unit Trust			Illinois, LP			Sarl			LP			LP			Other			Total

Total revenue	$	19,075		$	18,057		$	22,811		$	15,386		$	76,552		$	43,607		$	3,056		$	198,544
Operating expense		7,074			2,490			7,003			2,377			24,440			15,080			709			59,173

		12,001			15,567			15,808			13,009			52,112			28,527			2,347			139,371

Interest		(4,522	)		(9,900	)		(7,833	)		(14,253	)		(17,670	)		(15,454	)		(2,057	)		(71,689	)
Depreciation and amortization		(4,162	)		(5,272	)		(7,378	)		(5,911	)		(34,951	)		(10,941	)		(862	)		(69,477	)
Other income/(expense)		2,473			(924	)		195			(467	)		722			191			(96	)		2,094
Gain on sale		(3	)		—			—			—			—			—			102			99

Net income (loss)	$	5,787		$	(529	)	$	792		$	(7,622	)	$	213		$	2,323		$	(566	)	$	398

Company’s equity in earnings (loss) of unconsolidated joint ventures	$	1,645		$	167		$	549		$	(1,370	)	$	1,288		$	685		$	(159	)	$	2,805

LIBERTY PROPERTY LIMITED PARTNERSHIP