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 generally included in interest and other income in the accompanying consolidated statements of comprehensive income. For the three months ended December 31, 2016, the Company began including development-related fees in development service income in the consolidated statements of comprehensive income. The Company may also receive a promoted interest if certain return thresholds are met. The accounting policies for the unconsolidated joint ventures in which the Company has a noncontrolling interest are the same as those for the Company.

On a periodic basis, management assesses whether there are any indicators that the value of the properties owned by the unconsolidated joint ventures may be impaired. As detailed below, management has determined that certain assets are impaired as the unconsolidated joint ventures dispose of and anticipate the potential disposition of certain properties prior to the end of their remaining useful lives.

Liberty Venture I, LP

As of December 31, 2016, the Company had 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 New Jersey reportable segment.

As of December 31, 2016, the joint venture owned 28 industrial properties totaling 4.5 million square feet. The joint venture also had one property under development, which is expected to comprise, upon completion, 302,000 square feet and is expected to represent a Total Investment of $20.5 million.

During the year ended December 31, 2015, the joint venture realized gross proceeds of $8.5 million from the sale of one property totaling 198,000 square feet.

The Company had a receivable from Liberty Venture I, LP for $250,000 and $451,000 as of December 31, 2016 and 2015, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.

During the year ended December 31, 2014, the joint venture acquired three properties comprising 603,000 square feet and 51 acres of land from the Company for $43.0 million. The Company recognized a gain of $2.5 million on this transaction. This gain is included in gain on property dispositions in the Company's consolidated statements of comprehensive income.

The Company recognized $2.3 million, $1.6 million and $1.4 million in fees for services during the years ended December 31, 2016, 2015 and 2014, respectively.

Kings Hill Unit Trust

As of December 31, 2016, the Company had 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, 2016, the joint venture owned three industrial properties and 11 office properties totaling 490,000 square feet.

The Company had notes receivable from Kings Hill Unit Trust for an aggregate of $4.1 million and $4.7 million as of December 31, 2016 and 2015, respectively. The note receivable bears interest at a rate of 10% and is due in November 2020. These related party receivables are 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 $121,000 and $271,000 as of December 31, 2016 and 2015, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.

The Company recognized $293,000, $304,000 and $285,000 in fees for services during the years ended December 31, 2016, 2015 and 2014, respectively.

Liberty Illinois, LP

As of December 31, 2016, the Company had 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 Chicago/Milwaukee reportable segment.

As of December 31, 2016, the joint venture owned 12 industrial properties totaling 4.9 million square feet and 248 acres of developable land.

During the year ended December 31, 2016, the joint venture sold four properties containing 636,000 square feet for $32.5 million. The Company's share of gain on property dispositions was $1.0 million and is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.

The Company had a receivable from Liberty Illinois, LP for $132,000 of December 31, 2016. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.

The Company recognized $1.0 million, $1.3 million and $1.0 million in fees for services during the years ended December 31, 2016, 2015 and 2014, respectively.

Liberty Washington, LP

As of December 31, 2016, the Company had a 25% interest in Liberty Washington, LP, an entity engaged in the ownership of office properties in Washington, D.C (and formerly Northern Virginia). This joint venture's properties are part of the Company's DC Metro reportable segment. During the year ended December 31, 2016, the Company divested itself of properties in this joint venture that were located in Northern Virginia (see below). These properties had been part of a reportable segment classified as Other.

As of December 31, 2016, the joint venture owned two office properties totaling 451,000 square feet.

During the year ended December 31, 2016, the joint venture sold 12 properties located in Northern Virginia containing 1.2 million square feet and 6.0 acres of land for $187.2 million.

During the year ended December 31, 2016, due to adverse conditions in the Northern Virginia office market, six properties containing 698,000 square feet were transferred to mortgage lenders in satisfaction of an aggregate of $112.5 million in nonrecourse mortgage loans that were secured by the properties. The book values of these properties had been written down to fair value in prior periods.

Because these loans were nonrecourse, the Company believes that the transfers described above will not have an ongoing effect on its operating results or financial condition.

The Company's share of gain from property dispositions and extinguishment of debt is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income. During the year ended December 31, 2016, the Company's share of gain from extinguishment of debt was $4.2 million. The Company's share of gain on property dispositions for the year ended December 31, 2016 was $6.0 million.

During the year ended December 31, 2015, the joint venture realized gross proceeds of $5.0 million from the sale of one property totaling 80,000 square feet.

The Company had a receivable from Liberty Washington, LP for $322,000 and $693,000 as of December 31, 2016 and 2015, respectively. This related party receivable is reflected as prepaid expenses and other assets in the Company's consolidated balance sheets.

During the year ended December 31, 2015, the Company concluded that certain of the properties owned by this joint venture were impaired and the joint venture recorded impairment charges of $56.8 million. The Company's share of this impairment charge was $11.5 million. The impairment charges were related to the Company's Northern Virginia reportable segment and the Company's share was included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income. The Company determined these impairments based on third party offer prices. This is a Level 2 fair value calculation.

During the year ended December 31, 2014, the Company concluded that certain of the properties owned by this joint venture were impaired and the joint venture recorded an impairment charge of $172.7 million. The Company was not required to record its share of this impairment charge through equity in earnings of unconsolidated joint ventures as this amount was previously recognized through an other-than-temporary impairment charge related to this joint venture that was recorded in 2009.

The Company recognized $2.0 million, $4.8 million and $4.4 million in fees for services during the years ended December 31, 2016, 2015 and 2014, respectively.

Liberty/Comcast 1701 JFK Boulevard, LP

As of December 31, 2016, the Company had a 20% interest in Liberty/Comcast 1701 JFK Boulevard LP ("Liberty/Comcast"), formerly known as Liberty/Commerz 1701 JFK Boulevard, LP, an entity engaged in the ownership of a 1.25 million square foot office tower in Philadelphia, Pennsylvania. During the year ended December 31, 2015, the limited partnership agreement was amended to replace the general partner and admit a new general partner. As a result of this amendment the Company determined that this joint venture is a VIE. Because the Company and its third party partner share control of the joint venture as both parties have the power to direct its activities, the Company determined that it is not the primary beneficiary and that the equity method of accounting is appropriate. This joint venture is part of the Company's Philadelphia reportable segment.

The Company had a payable to this joint venture for $59,000 as of both December 31, 2016 and 2015. 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 this joint venture for $401,000 and $407,000 as of December 31, 2016 and 2015, respectively. This related party receivable is reflected in prepaid expenses and other assets in the Company's consolidated balance sheets.

The Company recognized $2.7 million, $2.7 million and $2.4 million in fees for services during the years ended December 31, 2016, 2015 and 2014 respectively.

Liberty Property 18th & Arch LP and Liberty Property 18th & Arch Hotel, LP

On June 30, 2014, the Company entered into two joint ventures for the purpose of developing and owning the Comcast Technology Center (the "Project") located in Philadelphia, Pennsylvania as part of a mixed-use development. The 59-story building will include 1.3 million square feet of leasable office space (the "Office") and a 222-room Four Seasons Hotel (the "Hotel") (collectively, "Liberty Property 18th and Arch"). Completion of the first phase of the Project is anticipated to be in the third quarter of 2017. Project costs for the development of the Project, exclusive of tenant-funded interior improvements, are anticipated to be approximately $932 million. The Company's investment in the project is expected to be approximately $186 million with 20% ownership interests in both joint ventures. As of December 31, 2016, the Company's investment in these joint ventures was $133.0 million and is reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheet. The Company began development on the building during 2014 and as of December 31, 2016, the total development in progress for the joint ventures was $671.0 million. These joint ventures are part of the Company's Philadelphia reportable segment.

The two joint ventures have engaged the Company as the developer of the Project pursuant to a Development Agreement by which the Company agrees, in consideration for a development fee, to be responsible for all aspects of the development of the Project and to guarantee the timely lien-free completion of construction of the Project and the payment, subject to certain exceptions, of any cost overruns incurred in the development of the Project. The Company is accounting for the development of this project using the percentage of completion method. During the years ended December 31, 2016, 2015 and 2014, the Company recognized $4.8 million, $5.1 million and $1.8 million, respectively, in developer and other fees related to the project.

The Company had a receivable from this joint venture of $1.3 million as of December 31, 2016. This receivable is included in prepaid expenses and other assets in the Company's consolidated balance sheets.

The Company had a payable to this joint venture of $1.2 million as of December 31, 2015. This payable is included in other liabilities in the Company's consolidated balance sheets.

During the year ended December 31, 2016, the joint venture sold three residential condominium units located on the 45^th floor containing 14,700 square feet for $14.3 million. The Company's share of gain on property dispositions was $0.3 million and is included in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.

The Company will manage and lease the Office and Four Seasons Hotels Limited will manage the Hotel.

Other Joint Ventures

As of December 31, 2016, the Company had a 50% ownership interest in three additional unconsolidated joint ventures. One of these joint ventures has six operating properties and an investment in land held for development and is part of the Company's Orlando reportable segment. One of these joint ventures sold its real estate assets in 2016 and was part of the Company's United Kingdom reportable segment. The sales price was $13.7 million and the Company's share of the loss on sale was $6,000. This amount is included in in equity in earnings of unconsolidated joint ventures in the accompanying consolidated statements of comprehensive income.

One 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. The Company had a note payable due to this joint venture of $2.3 million and $2.7 million as of December 31, 2016 and 2015, respectively. The note payable is interest free and is due upon written notice from the joint venture. This related party payable is reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheets.

Additionally, as of December 31, 2016, the Company had a 20% ownership interest in an unconsolidated joint venture that owns one acre of developable land and is part of the Company's Philadelphia reportable segment.

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 comprehensive income.

Summary Financial Data

The condensed balance sheets as of December 31, 2016 and 2015 and condensed statements of operations for the years ended December 31, 2016, 2015 and 2014 for Liberty Venture I LP, Kings Hill Unit Trust, Liberty Illinois, LP, Liberty Washington LP, Liberty/Comcast, Liberty Property 18th & Arch, and the other unconsolidated joint ventures are as follows (in thousands):

Condensed Balance Sheets:



	December 31, 2016
	Liberty			Kings Hill			Liberty			Liberty			Liberty/			Liberty Property
	Venture I, LP			Unit Trust			Illinois, LP			Washington, LP			Comcast			18th & Arch⁽²⁾		Other			Total
Real estate assets	$	226,313		$	137,960		$	251,765		$	289,627		$	495,842		$	—	$	71,722		$	1,473,229
Accumulated depreciation	(42,779		)	(26,872		)	(51,901		)	(44,235		)	(125,014		)	—		(9,702		)	(300,503		)
Real estate assets, net	183,534			111,088			199,864			245,392			370,828			—		62,020			1,172,726
Development in progress	6,886			—			—			—			—			671,032		—			677,918
Land held for development	—			—			31,567			—			—			—		42,259			73,826
Other assets	23,494			9,603			19,036			18,749			48,074			52,053		29,654			200,663
Total assets	$	213,914		$	120,691		$	250,467		$	264,141		$	418,902		$	723,085	$	133,933		$	2,125,133

Debt	$	154,386		$	83,846		$	137,294		$	103,667		$	309,475		$	—	$	57,660		$	846,328
Other liabilities	6,673			24,513			8,433			4,385			9,964			95,574		17,155			166,697
Equity	52,855			12,332			104,740			156,089			99,463			627,511		59,118			1,112,108
Total liabilities and equity	$	213,914		$	120,691		$	250,467		$	264,141		$	418,902		$	723,085	$	133,933		$	2,125,133

Company's net investment in unconsolidated joint ventures⁽¹⁾	$	11,175		$	5,349		$	15,339		$	38,863		$	18,688		$	132,952	$	22,712		$	245,078



	December 31, 2015
	Liberty			Kings Hill			Liberty			Liberty			Liberty/			Liberty Property
	Venture I, LP			Unit Trust			Illinois, LP			Washington, LP			Comcast			18th and Arch ⁽²⁾		Other			Total
Real estate assets	$	168,690		$	164,603		$	263,552		$	534,132		$	495,248		$	—	$	67,940		$	1,694,165
Accumulated depreciation	(37,473		)	(28,513		)	(54,308		)	(43,224		)	(111,067		)	—		(10,950		)	(285,535		)
Real estate assets, net	131,217			136,090			209,244			490,908			384,181			—		56,990			1,408,630
Development in progress	34,878			—			22,998			—			—			323,615		17,401			398,892
Land held for development	4,471			—			28,590			2,000			—			—		42,495			77,556
Other assets	14,860			8,967			20,668			52,429			47,441			15,594		49,312			209,271
Total assets	$	185,426		$	145,057		$	281,500		$	545,337		$	431,622		$	339,209	$	166,198		$	2,094,349

Debt	$	121,793		$	99,603		$	155,601		$	314,080		$	313,402		$	—	$	56,739		$	1,061,218
Other liabilities	10,571			27,408			8,594			10,634			9,618			40,958		29,064			136,847
Equity	53,062			18,046			117,305			220,623			108,602			298,251		80,395			896,284
Total liabilities and equity	$	185,426		$	145,057		$	281,500		$	545,337		$	431,622		$	339,209	$	166,198		$	2,094,349

Company's net investment in unconsolidated joint ventures ⁽¹⁾	$	11,563		$	6,789		$	18,221		$	55,552		$	20,465		$	62,677	$	43,187		$	218,454

Condensed Statements of Operations:



	Year Ended December 31, 2016
	Liberty			Kings Hill Unit			Liberty			Liberty			Liberty/			Liberty Property
	Venture I, LP			Trust⁽⁴⁾			Illinois, LP			Washington, LP			Comcast			18th & Arch⁽²⁾			Other ⁽³⁾			Total
Total revenue	$	25,149		$	11,926		$	26,599		$	39,727		$	65,587		$	—		$	9,888		$	178,876
Operating expense	6,835			4,854			9,961			15,935			26,761			280			2,801			67,427
	18,314			7,072			16,638			23,792			38,826			(280		)	7,087			111,449

Interest	(4,182		)	(2,554		)	(7,243		)	(10,866		)	(19,737		)	—			(2,462		)	(47,044		)
Depreciation and amortization	(6,375		)	(3,557		)	(7,589		)	(10,750		)	(14,513		)	—			(1,925		)	(44,709		)
Other income (expense)	50			(77		)	64			257			(213		)	1,270			7,123			8,474
Gain (loss) on sale/impairment	—			—			4,068			40,943			—			—			(11		)	45,000
Net income (loss)	$	7,807		$	884		$	5,938		$	43,376		$	4,363		$	990		$	9,812		$	73,170

Company's equity in earnings (loss) of unconsolidated joint ventures	$	2,332		$	275		$	2,065		$	10,857		$	1,594		$	213		$	4,634		$	21,970



	Year Ended December 31, 2015
	Liberty			Kings Hill Unit			Liberty			Liberty			Liberty/			Liberty Property
	Venture I, LP			Trust			Illinois, LP			Washington, LP			Comcast			18th & Arch ⁽²⁾			Other ⁽³⁾			Total
Total revenue	$	23,708		$	12,602		$	26,085		$	71,101		$	68,444		$	—		$	9,387		$	211,327
Operating expense	7,977			5,261			9,303			27,384			29,692			221			2,727			82,565
	15,731			7,341			16,782			43,717			38,752			(221		)	6,660			128,762

Interest	(5,415		)	(6,116		)	(8,441		)	(17,353		)	(19,936		)	—			(2,248		)	(59,509		)
Depreciation and amortization	(6,399		)	(3,954		)	(7,406		)	(20,725		)	(14,442		)	—			(1,840		)	(54,766		)
Other income (expense)	68			45,604			29			531			(227		)	30			9,925			55,960
Gain (loss) on sale/impairment	760			—			—			(56,792		)	—			—			—			(56,032		)
Net income (loss)	$	4,745		$	42,875		$	964		$	(50,622	)	$	4,147		$	(191	)	$	12,497		$	14,415

Company's equity in earnings (loss) of unconsolidated joint ventures	$	1,540		$	(425	)	$	807		$	(7,314	)	$	2,053		$	(29	)	$	6,517		$	3,149



	Year Ended December 31, 2014
	Liberty			Kings Hill Unit			Liberty			Liberty			Liberty/			Liberty Property
	Venture I, LP			Trust			Illinois, LP			Washington, LP			Comcast			18th & Arch (2)			Other ⁽³⁾			Total
Total revenue	$	19,277		$	13,221		$	25,181		$	72,824		$	63,580		$	—		$	8,923		$	203,006
Operating expense	6,398			5,387			8,965			28,349			23,557			199			2,897			75,752
	12,879			7,834			16,216			44,475			40,023			(199		)	6,026			127,254

Interest	(5,078		)	(6,110		)	(7,932		)	(18,612		)	(20,179		)	—			(3,415		)	(61,326		)
Depreciation and amortization	(5,757		)	(4,135		)	(7,380		)	(27,112		)	(14,591		)	—			(1,891		)	(60,866		)
Other income (expense)	(17		)	208			39			375			(278		)	(13		)	9,090			9,404
Loss from discontinued operations	—			—			187			(172,691		)	—			—			—			(172,504		)
Net income (loss)	$	2,027		$	(2,203	)	$	1,130		$	(173,565	)	$	4,975		$	(212	)	$	9,810		$	(158,038	)

Company's equity in earnings (loss) of unconsolidated joint ventures	$	788		$	(288	)	$	824		$	2,251		$	1,633		$	(33	)	$	5,139		$	10,314

(1)

Differences between the Company's net investment in unconsolidated joint ventures and its underlying equity in the net assets of the venture are 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. These adjustments have resulted in an aggregate difference reducing the Company's investments in unconsolidated joint ventures by $1.4 million and $4.5 million as of December 31, 2016 and 2015, respectively. 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.


(2)	Represents the combined results of two joint ventures related to the property at 18th and Arch Streets, Philadelphia.


(3)	Other income/(expense) for this group of joint ventures reflects gains related to the sales of land leasehold interests totaling $7.1 million, $9.9 million and $9.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.