COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Real Estate Joint Ventures

Real Estate Joint Ventures

9 Months Ended

Sep. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Consolidated Joint Ventures

The table below sets forth information pertaining to our investments in consolidated real estate joint ventures as of September 30, 2016 (dollars in thousands):



		Nominal
		Ownership		September 30, 2016				(1)
	Date	% as of		Total		Encumbered		Total
	Acquired	9/30/2016	Nature of Activity	Assets		Assets		Liabilities
LW Redstone Company, LLC	3/23/2010	85%	Development and operation of real estate (2)	$	157,168	$	80,154	$	53,056
M Square Associates, LLC	6/26/2007	50%	Development and operation of real estate (3)	66,053		47,006		45,807
Stevens Investors, LLC	8/11/2015	95%	Development of real estate (4)	40,282		—		7,680
				$	263,503	$	127,160	$	106,543

(1) Excludes amounts eliminated in consolidation.

(2) This joint venture’s properties are in Huntsville, Alabama.

(3) This joint venture’s properties are in College Park, Maryland.

(4) This joint venture’s property is in Washington, DC.

In January 2016, our partner in Stevens Investors, LLC contributed to the joint venture, for a value of $22.6 million, interests in contracts controlling land to be developed (including a purchase agreement and a ground lease). Our partner subsequently received a cash distribution from the joint venture of $13.4 million, which was funded by us. Our partner is also entitled to receive an additional distribution from the joint venture of $6.7 million to be funded by us (expected in 2017) that was reported in other liabilities on our consolidated balance sheet as of September 30, 2016.

Unconsolidated Joint Venture

As described further in Note 4, on July 21, 2016, we sold a 50% interest in six triple-net leased, single-tenant data center properties in Virginia by contributing them into GI-COPT, a newly-formed joint venture. We account for our 50% interest in the joint venture using the equity method of accounting. As of September 30, 2016, we had an investment balance in GI-COPT of $25.7 million. Our balance is $18.5 million lower than our share of the joint venture’s equity due to a difference between our cost basis and our share of the underlying equity in the net assets upon formation of the joint venture; we are amortizing this basis difference into equity in income from unconsolidated entities over the lives of the underlying assets. Under the terms of the joint venture agreement, we and our partner receive returns in proportion to our investments in the joint venture.