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, 2022

Equity Method Investments and Joint Ventures [Abstract]

Consolidated Real Estate Joint Ventures

The table below sets forth information as of September 30, 2022 pertaining to our investments in consolidated real estate joint ventures, which are each variable interest entities (dollars in thousands):


		Nominal Ownership %		September 30, 2022 (1)
	Date Acquired			Total Assets		Encumbered Assets		Total Liabilities		Mortgage Debt
Entity			Location
LW Redstone Company, LLC (2)	3/23/2010	85%	Huntsville, Alabama	$	578,626	$	88,453	$	112,909	$	52,366
Stevens Investors, LLC (3)	8/11/2015	95%	Washington, DC	167,869		—		678		—
M Square Associates, LLC	6/26/2007	50%	College Park, Maryland	101,865		59,933		51,531		50,085
				$	848,360	$	148,386	$	165,118	$	102,451

(1)Excludes amounts eliminated in consolidation.

(2)We fund all capital requirements. Our partner generally receives distributions of the first $1.2 million of annual operating cash flows and we receive the remainder.

(3)As of September 30, 2022, we also had a $112.0 million construction loan to the joint venture, which is eliminated in consolidation, that carries an interest rate of LIBOR plus 2.35% and had a balance of $96.4 million; the loan matures on August 11, 2024, and we have priority for repayment in full of borrowings and accrued interest on the loan over partner distributions of any future refinancing proceeds or other available cash flows.

Unconsolidated Real Estate Joint Ventures

The table below sets forth information pertaining to our investments in unconsolidated real estate joint ventures accounted for using the equity method of accounting (dollars in thousands):


	Date Acquired	Nominal Ownership %	Number of Properties	Carrying Value of Investment (1)
Entity				September 30, 2022		December 31, 2021
B RE COPT DC JV II LLC (2)	10/30/2020	10%	8	$	15,140	$	15,579
BREIT COPT DC JV LLC	6/20/2019	10%	9	11,801		12,460
B RE COPT DC JV III LLC	6/2/2021	10%	2	11,703		11,850
			19	$	38,644	$	39,889

(1)Included in the line entitled “investment in unconsolidated real estate joint ventures” on our consolidated balance sheets.

(2)Our investment in B RE COPT DC JV II LLC was lower than our share of the joint venture’s equity by $7.1 million as of September 30, 2022 and $7.2 million as of December 31, 2021 due to a difference between our cost basis and our share of the joint venture’s underlying equity in its net assets. We recognize adjustments to our share of the joint venture’s earnings and losses resulting from this basis difference in the underlying assets of the joint venture.