Annual report pursuant to Section 13 and 15(d)

Properties, net

v2.4.1.9
Properties, net
 12 Months Ended
Dec. 31, 2014
Real Estate [Abstract]  
Properties, net
Properties, net
 
Operating properties, net consisted of the following (in thousands): 
 
December 31,
 
2014
 
2013
Land
$
439,355

 
$
430,472

Buildings and improvements
3,015,216

 
2,869,870

Less: accumulated depreciation
(703,083
)
 
(597,649
)
Operating properties, net
$
2,751,488

 
$
2,702,693


 
In 2014, we recognized $12.9 million in additional depreciation expense resulting from our revision of the useful life of a property in Greater Philadelphia that was removed from service for redevelopment.

Projects we had in development or held for future development consisted of the following (in thousands): 
 
December 31,
 
2014
 
2013
Land
$
214,977

 
$
245,676

Construction in progress, excluding land
330,449

 
265,932

Projects in development or held for future development
$
545,426

 
$
511,608


 
2014 Dispositions

In 2014, we completed dispositions of the following operating properties (dollars in thousands):
Project Name
 
Location
 
Date of Sale
 
Number of Buildings
 
Total Rentable Square Feet
 
Transaction Value
 
Gain on Disposition
4969 and 4979 Mercantile Road
 
White Marsh, MD
 
7/14/2014
 
2

 
96,721

 
$
5,960

 
$
2,124

9930 and 9940 Franklin Square
 
White Marsh, MD
 
7/30/2014
 
2

 
71,992

 
10,475

 
2,303

5020, 5022, 5024 and 5026 Campbell Boulevard
 
White Marsh, MD
 
8/4/2014
 
4

 
134,245

 
12,400

 
666

 
 
 
 
 
 
8

 
302,958

 
$
28,835

 
$
5,093



We also sold land in 2014 for $28.3 million and recognized gains of $5.6 million on the sales.

2014 Construction Activities

In 2014, we placed into service an aggregate of 692,000 square feet in five newly constructed office properties located in the Baltimore/Washington Corridor, Northern Virginia and Huntsville. As of December 31, 2014, we had eight office properties under construction, or for which we were contractually committed to construct, that we estimate will total 1.2 million square feet upon completion, including four in Northern Virginia, two in the Baltimore/Washington Corridor, one in San Antonio and one in Huntsville. We also had five office properties under redevelopment that we estimate will total 344,000 square feet upon completion, including three in the Baltimore/Washington Corridor, one in Greater Philadelphia and one in St. Mary’s County, Maryland.

2013 Dispositions

 In April 2011, we completed a review of our portfolio and identified a number of properties that were no longer closely aligned with our strategy, and our Board of Trustees approved a plan by Management to dispose of some of these properties (the “Strategic Reallocation Plan”). In December 2011, we identified additional properties for disposal, and our Board of Trustees approved a plan by management to increase the scope of the Strategic Reallocation Plan to include the disposition of additional properties.  We completed dispositions of the following properties in 2013 primarily in connection with the Strategic Reallocation Plan (dollars in thousands):
Project Name
 
Location
 
Date of Sale
 
Number of Buildings
 
Total Rentable Square Feet
 
Transaction Value
 
Gain on Disposition
920 Elkridge Landing Road
 
Linthicum, MD
 
6/25/2013
 
1

 
103,000

 
$
6,900

 
$
—

4230 Forbes Boulevard
 
Lanham, MD
 
12/11/2013
 
1

 
56,000

 
5,600

 
1,507

December 2013 Colorado Springs Portfolio Disposition
 
Colorado Springs, CO
 
12/12/2013
 
15

 
1,165,000

 
133,925

 
1,164

December 2013 Portfolio Conveyance
 
Colorado Springs, CO and Linthicum, MD
 
12/23/2013
 
14

 
1,021,000

 
146,876

 
—

 
 
 
 
 
 
31

 
2,345,000

 
$
293,301

 
$
2,671



Each of the above dispositions represents property sales except for the December 2013 Portfolio Conveyance, the disposition of which was completed in connection with a debt extinguishment, as described further below. We also had a disposition of a non-operating property in 2013 for an aggregate transaction value of $3.5 million. In addition to the gains on dispositions reflected above, we recognized impairment losses on certain of these assets that are disclosed in Note 3.

On December 23, 2013, the mortgage lender on a $146.5 million nonrecourse mortgage loan that was secured by the December 2013 Portfolio Conveyance accepted a deed in lieu of foreclosure on the properties. As a result, we transferred title to the properties to the mortgage lender and we were relieved of the debt obligation plus accrued interest. As of the transfer date, the property had an estimated fair value of $74 million. Upon completion of this transfer, we recognized a gain on extinguishment of debt of $67.8 million, representing the excess of the mortgage loan and interest payable extinguished over the carrying values of the properties transferred as of the transfer date (which included the effect of previous impairment losses) and related closing costs.

2013 Construction Activities

In 2013, we placed into service an aggregate of 812,000 square feet in eight newly constructed office properties located in the Baltimore/Washington Corridor, Northern Virginia and Huntsville.